CNB HOLDINGS INC /GA/, SB-2, 1998-04-01

CNB HOLDINGS INC /GA/
SB-2, 1998-04-01

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<PAGE> 1

As filed with the Securities and Exchange Commission on April 1, 1998
Registration No.________

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM SB-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

----------------------

CNB HOLDINGS, INC.
(Name of Small Business Issuer in its Charter)

<TABLE>
<CAPTION>
Georgia 6711 58-2362335
<S> <C> <C>
(State or other jurisdiction (Primary Standard Industrial I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

1303 HIGHTOWER TRAIL, SUITE 130
ATLANTA, GEORGIA 30350
770/650-8262

(Address and telephone number of registrant's principal executive offices)

H. N. PADGET, JR.
CNB HOLDINGS, INC.
1303 HIGHTOWER TRAIL, SUITE 130
ATLANTA, GEORGIA 30350

(Address and telephone number of agent for service)

Copies to:

Thomas O. Powell, Esquire Ralph W. Davis, Esquire
Troutman Sanders LLP Waller Lansden Dortch & Davis, PLLC
600 Peachtree Street, N.E., Suite 5200 511 Union Street, Suite 2100
Atlanta, Georgia 30308 Nashville, Tennessee 37219
404/885-3294 615/252-2481

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement.

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

<PAGE> 2

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]

If the delivery of the prospectus is expected to be made pursuant to
Rule 434, check the following box. [ ]

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=====================================================================================================================

CALCULATION OF REGISTRATION FEE

TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT (1) OFFERING PRICE (1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK,
PAR VALUE $1.00
PER SHARE 1,035,000 SHARES (2) $10.00 $10,350,000 $3,053.25

=====================================================================================================================
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(1) Estimated solely for the purpose of calculating the registration fee
in accordance with Rule 457 under the Securities Act of 1933, as
amended.
(2) Includes an aggregate of 135,000 shares to cover overallotments, if
any, pursuant to the over-allotment option granted to the underwriter.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

<PAGE> 3

PROSPECTUS

SUBJECT TO COMPLETION, DATED APRIL 1, 1998

900,000 SHARES

CNB HOLDINGS, INC.

A PROPOSED BANK HOLDING COMPANY FOR
CHATTAHOOCHEE NATIONAL BANK (IN ORGANIZATION)

COMMON STOCK

This Prospectus relates to the offering by CNB HOLDINGS, INC., a
Georgia corporation (the "Company"), of 900,000 shares of its common stock,
$1.00 par value per share (the "Common Stock"), at the purchase price of $10.00
per share (the "Offering"). The Company is a development stage corporation that
has been organized to hold, upon receipt of regulatory approvals, all of the
common stock of CHATTAHOOCHEE NATIONAL BANK (In Organization) (the "Bank"),
Alpharetta, Georgia. There has been no public trading market for the Common
Stock. See "Underwriting" for a discussion of the factors considered in
determining the initial offering price. The Common Stock has been approved for
listing on the Nasdaq SmallCap Market under the symbol "___." Unless otherwise
waived by the Company, any one investor (together with the investor's
affiliates) will be permitted to purchase a maximum of 45,000 shares ($450,000)
of Common Stock.

SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN OF
THE RISKS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON
STOCK OFFERED HEREBY.

THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER
OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
SAVINGS ASSOCIATION INSURANCE FUND OR THE BANK INSURANCE FUND OF THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

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=======================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share...................... $ 10.00 $0.825 $ 9.175
=======================================================================================================
Total (3)...................... $9,000,000 $742,500 $8,257,500
=======================================================================================================
</TABLE>

(1) The Company has also agreed to indemnify J. C. Bradford & Co. (the
"Underwriter") against certain civil liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting offering and organizational operating expenses of the
Company. Offering expenses are estimated to be approximately $32,500,
and organizational expenses are estimated to be approximately $150,000.

<PAGE> 4

(3) The Company has granted the Underwriter a 30-day over-allotment option
to purchase up to 135,000 additional shares of Common Stock on the same
terms and conditions as set forth above. If all such shares are
purchased by the Underwriter, the total Price to Public will be
$10,350,000, the total Underwriting Discount will be $853,875 and the
total Proceeds to the Company will be $9,496,125. See "Underwriting."

--------------------

The shares of Common Stock are offered subject to receipt and
acceptance by the Underwriter, to prior sale and to the Underwriter's right to
reject orders in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that certificates for the shares of Common Stock
will be available for delivery on or about , 1998.

--------------------

J. C. BRADFORD & CO.

_________, 1998.

Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

ii
<PAGE> 5

[Insert a map depicting the proposed bank's primary market area and site of its
main office.]

--------------------

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
COMMON STOCK OF THE COMPANY, INCLUDING STABILIZING AND SHORT-COVERING
TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER AND SELLING GROUP
MEMBERS (IF ANY) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON
STOCK ON THE NASDAQ IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE
"UNDERWRITING."

iii

<PAGE> 6

SUMMARY

The following Summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information and the Financial
Statements and the related Notes thereto appearing elsewhere in this Prospectus.
Unless otherwise indicated, the information contained in this Prospectus assumes
(i) no exercise of the Underwriter's over-allotment option and (ii) a public
offering price of $10.00 per share.

THE COMPANY

The Company was incorporated under the laws of the State of Georgia on
November 5, 1997, primarily to serve as the holding company for the Bank. After
the charter application for the Bank receives preliminary approval from the
Office of the Comptroller of the Currency (the "OCC"), the Company will file
applications with the Federal Reserve Board through the Federal Reserve Bank of
Atlanta (the "Federal Reserve") and the Department of Banking and Finance of
Georgia (the "Department of Banking") for prior approval to become a bank
holding company. Following such approval and the approval of the OCC for the
Bank to commence business, the Bank will issue all of its common stock to the
Company to raise its required initial capital, and the Company's initial
business will be that of a bank holding company and the Bank's sole shareholder.
The organizers of the Company and the Bank, who will also serve as directors of
the Company and the Bank as described in "Management" (the "Organizers"),
anticipate receiving such approvals during the second quarter of 1998. Such
approvals will require the Company to raise at least $11,000,000 in capital for
the Company and to invest at least $9,600,000 of that capital in the Bank and
will contain certain other normal conditions. If regulatory approvals are not
obtained, the Company intends to commence dissolution proceedings. In this
event, shareholders will receive only a portion, if any, of their original
investment. See "Risk Factors--Failure to Satisfy Regulatory Conditions" and
"Proposed Business of the Company and the Bank."

THE BANK

The Bank is in the process of being organized as a national bank under
the laws of the United States. The Organizers filed an application with the OCC
for this purpose and with the Federal Deposit Insurance Corporation (the "FDIC")
for deposit insurance, and such applications are pending. The Bank will not be
authorized to conduct its banking business until it obtains a charter from the
OCC. The issuance of the charter will depend, among other things, upon the
Bank's receiving $9,600,000 in capital from the Company and upon compliance with
certain standard conditions expected to be imposed by the FDIC and the OCC which
are generally designed to familiarize the Bank with certain applicable operating
requirements and to prepare the Bank to commence business operations. The OCC
requires that a new national bank complete the organization process and receive
final approval to open for business within 18 months after receipt of
preliminary approval from the OCC. As of March 30, 1998, the applications filed
with the OCC and the FDIC were pending. The Bank expects to satisfy all
conditions for organizing the Bank and to open for business during the second
quarter of 1998 or as soon thereafter as practicable. See "Risk Factors--Failure
to Satisfy Regulatory Conditions." The Bank intends to engage in a general
commercial banking business, emphasizing the banking needs of individuals and
small to medium-sized businesses in its primary service area (the "PSA"). See
"Proposed Business of the Company and the Bank."

The Bank's philosophy with respect to its initial operations will be to
emphasize prompt and responsive personal service to the residents of Alpharetta,
Georgia and the other communities located in north Fulton County in order to
attract customers and acquire market share now controlled by other financial
institutions in the Bank's PSA. The Company believes that local ownership and
control will aid the growth and success of the Bank.

The offices of the Company and the Bank will be located at 7855 North
Point Parkway, Suite 200, Alpharetta, Georgia 30022. Pending commencement of
operations, the current principal executive office of the Company and the Bank
is located at: 1303 Hightower Trail, Suite 130, Atlanta, Georgia 30350, and
their telephone number at that address is (770) 650-8262.

<PAGE> 7

ORGANIZERS' OFFERING

In a private placement that closed on April __, 1998 (the "Organizers'
Offering"), the Organizers purchased a total of 200,000 units (the "Units"),
which each consisted of one share of Common Stock and one warrant to acquire one
share of Common Stock (a "Warrant"), at an aggregate purchase price of
$2,000,000 ($10.00 per Unit). The exercisability of the Warrants is conditioned
upon regulatory approval. Each Warrant grants the holder the right to purchase
one share of Common Stock at a price of $10.00 per share, the offering price of
the Common Stock being offered herein. The Warrants will vest over a five-year
period (20% per year) commencing at the date of issuance and will have a term of
10 years from the issuance date, at which time they will expire. The warrant
agreement further provides for a call provision in the event the Bank is
determined to require additional capitalization under a supervisory order, and
if not honored when called, will terminate at that time.

THE OFFERING

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<S> <C>
Common Stock offered by the Company ................. 900,000 shares of Common Stock, par value $1.00, of
the Company

Common Stock to be outstanding after the
Offering........................................... 1,100,000 shares(1)

Use of proceeds...................................... To capitalize the Bank, to pay organizational expenses
of the Company and of the Offering and to provide
approximately $500,000 of working capital for the
Company.

The Bank will use the proceeds of the Offering to pay
organizational and pre-opening operating expenses,
including paying officers' and employees' salaries,
to lease, construct and furnish a site for the Bank's
main office and, following the commencement of business,
to provide working capital to be used for business
purposes, including making loans and other investments.
See "Use of Proceeds."
Proposed Nasdaq SmallCap Market Symbol............... "_____"
</TABLE>

- ------------------

(1) Does not include shares of Common Stock issuable upon the exercise of the
Warrants or pursuant to options that have been or may be granted under the
Option Plans of the Company (as defined herein). See "Organizers' Offering,"
"Management--Incentive Stock Option Plan," and "Management--Non-Qualified Stock
Option Plan."

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<PAGE> 8

RISK FACTORS

Investment in the Common Stock involves a significant degree of risk.
In addition to the other information in this Prospectus, the following factors
should be considered carefully in evaluating an investment in the Common Stock
offered hereby. This Prospectus contains "forward-looking statements" relating
to, without limitation, future economic performance, plans and objectives of
management for future operations and projections of revenues and other financial
items that are based on the beliefs of the Organizers and management, as well as
assumptions made by and information currently available to, the Organizers and
management. The words "expect," "estimate," "anticipate," "believe" and similar
expressions and variations thereof are intended to identify forward-looking
statements. The cautionary statements set forth in this "Risk Factors" section
and elsewhere in this Prospectus identify important factors with respect to such
forward-looking statements, including certain risks and uncertainties, that
could cause actual results to differ materially from those in such
forward-looking statements. In addition to considering factors set forth
elsewhere in this Prospectus, persons interested in purchasing shares of the
Common Stock should carefully consider the following risks before making a
decision to subscribe. The order of the following is not intended to be
indicative of the relative importance of any described risk nor is the following
intended to be inclusive of all risks of an investment in the Common Stock.
Because the Company is only recently formed and the Bank will only obtain the
necessary regulatory approvals in the future and will not have commenced banking
operations as of the date hereof, prospective investors do not have access to
all of the information that, in assessing their proposed investment, is
available to the purchasers of securities of a financial institution with a
history of operations. The Company's profitability will depend primarily upon
the Bank's operations, and there is no assurance that the Bank will ever operate
profitably.

THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT
INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY.

NO OPERATING HISTORY AND ANTICIPATED LOSSES

The Bank, which will initially be the sole subsidiary of the Company
and its only source of income, is in organization and has no operating history
on which to base any estimate of its future prospects. The Company's initial
profitability will depend entirely upon the Bank's operations and the Bank's
ability to pay dividends to the Company, which is restricted by law. See
"Dividends" and "Supervision and Regulation--Dividends." The Bank's proposed
operations are subject to risks inherent in the establishment of a new business
and, specifically, of a new bank. Typically, most new banks incur substantial
initial expenses, are not profitable in the first year of operation and, in some
cases, are not profitable for several years. There can be no assurance that the
Bank will ever operate profitably. Initially, all of the Bank's loans will be
unseasoned--new loans to new borrowers. Accordingly, it will take several years
to determine the borrowers' payment histories, and therefore, the quality of the
Bank's loan portfolio cannot be determined until that time. If the Bank is
ultimately unsuccessful, there is no assurance that shareholders will recover
all or any part of their investment in the Common Stock.

INDUSTRY COMPETITION MAY HAVE ADVERSE EFFECT ON SUCCESS OF THE COMPANY

The banking business is highly competitive. The Bank will compete as a
financial intermediary with numerous other lenders and deposit-takers, including
other commercial banks, savings and loan associations, credit unions, finance
companies, mutual funds, insurance companies and brokerage and investment
banking firms, all of which are actively soliciting business from residents of
north Fulton County, Georgia, and many of which have greater resources than will
be available to the Bank or the Company. See "Proposed Business of the Company
and the Bank--The Bank."

SUCCESS DEPENDS ON ECONOMIC CONDITIONS

The majority of the Bank's borrowers and depositors are anticipated to
be individuals and businesses located and doing business in the north Fulton
County area. The success of the Bank will depend on the general economic
conditions in the Bank's PSA of north Fulton County, Georgia. Any factors which
adversely affect the north Fulton County economy could adversely affect the
performance of the Bank. Although the Company expects favorable economic
development in this market area, there is no assurance that favorable economic
development

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<PAGE> 9

will occur or that the Company's expectation of corresponding growth in the
Bank's business will be achieved. See "Proposed Business of the Company and the
Bank."

POSSIBLE ADVERSE EFFECT OF MONETARY POLICIES ON SUCCESS OF THE COMPANY

The results of operations of the Bank will be affected by credit
policies of monetary authorities, particularly the Board of Governors of the
Federal Reserve System. There can be no assurance that the effect of actions by
monetary and fiscal authorities, including the Federal Reserve, will not have an
adverse effect on the deposit levels, loan demand or the business and earnings
of the Bank. See "Supervision and Regulation."

DEPENDENCE ON KEY PERSONNEL

H. N. Padget, Jr. has been instrumental in the organization of the
Company and the Bank and will be the key management official in charge of the
daily business operations of the Company and the Bank. The success of the
Company and the Bank may depend upon the continued service of Mr. Padget as the
President and Chief Executive Officer of the Company and the Bank. The Company
has entered into an employment agreement with Mr. Padget, but cannot be assured
of his continued service. See "Management--Executive Compensation." The Company
has also received a letter from Mr. Padget's former employer threatening
possible legal action, although the Company believes this claim is without
merit. See "Legal Proceedings."

LIMITATION ON GROWTH

At least during the first years of the Bank's operations, the Bank's
legally mandated lending limits will be lower than many of its competitors
because it will initially have less capital than many of its competitors. The
Bank's lower lending limits may discourage potential borrowers who have lending
needs that exceed the Bank's limits, thereby limiting the Bank's ability to
grow. The Bank may seek to serve the needs of such borrowers by selling loan
participations to other institutions, but there can be no assurance that this
strategy will succeed. See "Proposed Business of the Company and the Bank--The
Bank."

NO DIVIDENDS

The Company will initially have no source of income other than
dividends paid to it by the Bank. The ability of the Company to pay dividends to
its shareholders will therefore depend on the ability of the Bank to pay
dividends to the Company. Bank holding companies and national banks are both
subject to significant regulatory restrictions on the payment of cash dividends.
In light of these restrictions and the need for the Company and the Bank to
retain and build capital, it will be the policy of the Boards of Directors of
the Company and the Bank to reinvest earnings for the period of time necessary
to help ensure the success of their operations. As a result, the Company has no
current plans to initiate the payment of cash dividends, and its future dividend
policy will depend on the Company's and the Bank's earnings, capital
requirements, financial condition and other factors considered relevant by the
Boards of Directors of the Company and the Bank. See "Dividends" and
"Supervision and Regulation--Dividends."

NO PRIOR PUBLIC MARKET; OFFERING PRICE ARBITRARILY DETERMINED

Prior to the Offering, there has been no public trading market for the
Common Stock, and there can be no assurance that an active trading market will
develop or continue following the Offering or that the market price of the
Common Stock will not decline below the initial public offering price. Since the
Company is only recently formed and the Bank is in the process of being
organized, the initial public offering price of $10.00 per share was determined
by negotiations between the Company and the Underwriter based on several
factors, including the need to raise sufficient capital to complete organization
and commence operations. Because the price was not set with reference to
traditional measures of equity valuation (such as book value, earnings power,
discounted cash flow, etc.), the offering price may not be indicative of the
market price for the Common Stock after the Offering. See "Underwriting."

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<PAGE> 10

POSSIBLE VOLATILITY OF MARKET PRICE

If a market develops for the Common Stock after the Offering, the price
for the Common Stock will be determined in the market and may be influenced by
many factors, including the depth and liquidity of the market for the Common
Stock, investor perception of the Company, the Company's industry as a whole and
general economic and market conditions. Quarterly operating results of the
Company, changes in earnings estimated by analysts, changes in general
conditions in the economy or the financial markets or other developments
affecting the Company could cause the market price of the Common Stock to
fluctuate substantially. In addition, the stock market from time to time
experiences extreme price and volume fluctuations. This volatility has had a
significant effect on the market prices of securities, often for reasons
unrelated to the operating performance of the issuers. Therefore, from time to
time after the Offering, there may be significant volatility in the market price
of the Common Stock.

CHANGES IN INDUSTRY REGULATIONS MAY HAVE ADVERSE EFFECT ON SUCCESS OF THE
COMPANY

The potential success or failure of the Bank will depend not only upon
competitive factors, but also upon state and federal regulations affecting banks
and bank holding companies generally. Regulations now affecting the Company and
the Bank may be changed at any time, and there is no assurance that such changes
will not adversely affect the business of the Company and the Bank.

DILUTION

The purchasers of the Common Stock offered hereby will experience
immediate and significant dilution of $.81 per share, the amount by which the
purchase price of the Common Stock offered hereby will exceed the net tangible
book value of the Common Stock immediately following the Offering. Also, the
Common Stock is not subject to preemptive rights, which means that the owners of
the Common Stock are not entitled to purchase additional shares of Common Stock
if Common Stock is offered to others. As a result, the interest in the Company
of owners of the Common Stock will be diluted if additional Common Stock is sold
or issued pursuant to options, warrants or convertible securities, including
pursuant to the Option Plans of the Company (as defined herein). See "Dilution."

FAILURE TO SATISFY REGULATORY CONDITIONS

If the Company satisfies the Offering conditions and issues the shares
of Common Stock, but final approval for the Bank to commence banking operations
is not granted within 18 months after the receipt of preliminary approval from
the OCC or other regulatory requirements are not satisfied, the Company will
solicit shareholder approval for its dissolution and liquidation under Georgia
law in which event, the Company will distribute to the shareholders its net
assets remaining after payment or provision for payment of all claims against
the Company. The shareholders will receive a return of only a portion, if any,
of their original investment, since the proceeds of the Offering and the
Organizers' Offering will have been used to pay all expenses incurred by the
Company, including the expenses of the Offering, the organizational and
pre-opening expenses of the Company and the Bank and the claims of creditors.

POTENTIAL CONTROL BY DIRECTORS AND OFFICERS

After the Offering and assuming that the Warrants have not been
exercised, the directors and officers of the Company will own approximately
18.2% of the outstanding Common Stock (approximately 16.2% if the Underwriter's
over-allotment option is exercised in full). These persons may acquire
additional shares of Common Stock in the Offering or thereafter which will
increase such percentage. As a result, the directors and officers taken together
may effectively be able to control the outcome of director elections and have
control over the course of the Company's future activities. See
"Management--Proposed Company Officers and Directors; Proposed Bank Officers and
Directors."

RISKS ASSOCIATED WITH THE YEAR 2000

Like many financial institutions, the Company and the Bank will rely
upon computers for the daily conduct of their business and for information
systems processing. There is concern among industry experts that on January

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<PAGE> 11

1, 2000 computers will be unable to "read" the new year, and there may be
widespread computer malfunctions. The Company and the Bank will generally rely
on software and hardware developed by independent third parties to provide the
information systems used by the Company and the Bank. The Company intends to
seek assurances about the Year 2000 compliance with respect to any third party
hardware or software systems it intends to use. The Company is currently
negotiating with a software provider. The Company believes that its internal
systems and software and the network connections it will maintain will be
adequately programmed to address the Year 2000 issue. Based on information
currently available, management does not believe that the Company or the Bank
will incur significant costs in connection with the Year 2000 issue.
Nevertheless, there can be no assurances that all hardware and software that
either the Company or the Bank uses will be Year 2000 compliant, and the Company
cannot predict with any certainty the costs the Company or the Bank will incur
to respond to any Year 2000 issues. Further, the business of many of the Bank's
customers may be negatively affected by the Year 2000 issue, and any financial
difficulties incurred by the Bank's customers in solving Year 2000 issues could
negatively affect such customer's ability to repay any loans which the Bank may
have extended. Therefore, even if the Company and the Bank do not incur
significant direct costs in connection with responding to the Year 2000 issue,
there can be no assurance the failure or delay of the Bank's customers or other
third parties in addressing the Year 2000 issue or the costs involved in such
process will not have a material adverse effect on the Bank's business,
financial condition and result of operations.

DETERRENT EFFECT OF ANTITAKEOVER PROVISIONS

The Articles of Incorporation and the Bylaws of the Company contain
certain provisions that may deter an attempt to change or gain control of the
Company. As a result, the shareholders of the Company may be deprived of
opportunities to sell some or all of their shares at prices that represent a
premium over market prices. See "Description of Capital Stock of the
Company--Certain Provisions of the Articles of Incorporation and Bylaws."

ORGANIZERS' OFFERING

In the Organizer's Offering, which closed on April ___, 1998, the
Organizers purchased a total of 200,000 Units, which each consisted of one share
of Common Stock and one Warrant, at an aggregate purchase price of $2,000,000
($10.00 per unit). The exercisability of the Warrants is conditioned upon
regulatory approval. Each Warrant grants the holder the right to purchase one
share of Common Stock at a price of $10.00 per share, the offering price of the
Common Stock being offered herein. The Warrants will vest over a five-year
period (20% per year) commencing at the date of issuance and will have a term of
10 years from the issuance date, at which time they will expire. The warrant
agreement further provides for a call provision in the event the Bank is
determined to require additional capitalization under supervisory order, and if
not honored when called, will terminate at that time.

USE OF PROCEEDS

BY THE COMPANY

The net proceeds of the Offering to the Company are estimated to be
$8,257,500 ($9,496,125 if the Underwriter's over-allotment option is exercised
in full) after deducting underwriting discounts and commissions. The Company
will use approximately $182,500 of the net proceeds to pay organizational and
Offering expenses of the Company and the Bank. The Company's organizational and
Offering expenses will consist primarily of legal, accounting, marketing and
printing expenses. Thereafter, the Company will use the net proceeds of the
Offering, together with the net proceeds of the Organizers' Offering, to
purchase all of the common stock of the Bank for a minimum of $9,600,000. Funds
then remaining, estimated at $475,000, will be retained by the Company for
working capital and other general purposes, including payment of expenses of the
Company and the provision of additional capital for the Bank, or the purchase of
certificates of deposit of the Bank, if necessary or deemed desirable by the
Company. In addition, the Company will be reimbursed by the Bank for amounts
advanced by the Company to the Bank for pre-opening and organizational expenses
of the Bank. See "--By the Bank."

BY THE BANK

The Bank will receive a minimum of $9,600,000 from the issuance of its
common stock to the Company. The Bank will use approximately $350,000 of such
proceeds to reimburse the Company for amounts advanced by

6
<PAGE> 12

the Company to pay organizational expenses, estimated at $100,000, and
pre-opening expenses, estimated at $250,000, of the Bank. Organizational
expenses of the Bank include consulting fees, expenses for market analysis and
feasibility studies, and legal fees and expenses. Pre-opening expenses of the
Bank include officers' and employees' salaries and benefits estimated at
$100,000 (assuming the Bank opens for business on its target date of June 1,
1998), as well as lease payments, marketing expenses, interest expenses,
accounting and other pre-opening expenses. For additional information concerning
the compensation of the President and Chief Executive Officer of the Company and
the Bank, see "Management--Executive Compensation." The Bank will also use
approximately $250,000 for furniture, fixtures and equipment for Bank's
principal facility and $75,000 for leasehold improvements to such facility from
the proceeds. Expenses for furniture, fixtures, equipment and leasehold
improvements will be capitalized and amortized over the life of the lease or the
estimated useful life of the asset. The balance of the proceeds to be received
by the Bank, estimated at approximately $8,925,000, will be used for loans to
customers, investments and other general corporate purposes.

In the opinion of the Company, the estimated net proceeds of
approximately $8,257,500 to the Company from the Offering and the remaining
proceeds of the Organizers' Offering should satisfy the cash requirements of the
Company and the Bank for their respective twelve months of operations, and the
Company and the Bank should not need to raise additional funds for operations
during this period, but there can be no assurance that this will be the case.

DILUTION

At April __, 1998, the net tangible book value of the Company was
approximately $1.85 million, or $9.25 per share of Common Stock. Net tangible
book value per share represents the amount of the Company's total tangible
assets less total liabilities, divided by the number of shares of Common Stock
outstanding.

After giving effect to the issuance and sale by the Company of the
900,000 shares of Common Stock offered hereby at an initial public offering
price of $10.00 per share and after deducting the estimated underwriting
discount and offering expenses payable by the Company and the receipt by the
Company of approximately $8,257,500 in net proceeds, the pro forma net tangible
book value of the Company at April ___, 1998, would have been approximately
$10.108 million, or $9.19 per share of Common Stock. This represents an
immediate decrease in pro forma net tangible book value of $.06 per share to
existing shareholders and an immediate dilution in net tangible book value of
$.81 per share to purchasers of Common Stock in the Offering. The following
table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share................................................... $ 10.00

Net tangible book value prior to the Offering............................................. $9.25

Decrease in net tangible book value attributable to new investors......................... (.06)
-----

Pro forma net tangible book value after the Offering...................................... 9.19
--------

Dilution in net tangible book value to new investors...................................... $ .81
========
</TABLE>

The following table summarizes, at April __, 1998, the number of shares
of Common Stock issued by the Company, the total consideration paid to the
Company and the average price per share paid to the Company by existing
shareholders and by the new investors purchasing shares of Common Stock in the
Offering at an initial public offering price of $10.00 per share and before
deduction of estimated underwriting discount and offering expenses payable by
the Company:

7
<PAGE> 13

<TABLE>
<CAPTION>
SHARES PURCHASED(1) TOTAL CONSIDERATION AVERAGE PRICE
-------------------- ---------------------- -------------
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders 200,000 18% $ 2,000,000 18% $ 10.00
New investors............ 900,000 82% 9,000,000 82% 10.00
--------- ------- ------------ -------
Total(2)........... 1,100,000 100% $ 11,000,000 100%
========= ============
</TABLE>

- ------------------
(1) The existing shareholders acquired their shares of Common Stock through
the purchase of the Units, which were offered at a price per Unit of
$10.00, the same price to be paid by the new investors for a share of
Common Stock in the Offering. Because the exercise price of the Warrant
is $10.00, and the Warrants are subject to certain conditions,
including regulatory approval, a vesting schedule and possible
termination, they have been deemed for purposes of this table to have
no value. See "Organizers' Offering." Therefore, this table assumes
that the purchase of a Unit is the same as a purchase of a share of
Common Stock.

(2) Does not include shares of Common Stock issuable upon the exercise of
the Warrants or pursuant to options that have been or may be granted
under the Option Plans of the Company (as defined herein). See
"Organizers' Offering," "Management--Incentive Stock Option Plan" and
"Management--Non-Qualified Stock Option Plan."

In recognition of their acceptance of the financial risks incurred in
connection with the organization of the Company and the Bank, subject to
obtaining regulatory approval, the Organizers have been granted, for nominal
consideration, Warrants to purchase one share of Common Stock for each share
purchased by them in the Organizers' Offering. See "Organizers' Offering."
Assuming all Warrants issued in conjunction with the shares of Common Stock
purchased by the Organizers are exercised, the Organizers would own, as a group,
30.8% of the Common Stock to be outstanding upon the completion of the Offering
and exercise of the Warrants (27.9% of the Common Stock if the Underwriter's
over-allotment option and Warrants are exercised). The Company's Board of
Directors and initial shareholders have adopted an Incentive Stock Option Plan
(the "Incentive Stock Option Plan") whereby stock options may be granted to
employees who are contributing significantly to the management or operation of
the business of the Company or its subsidiaries as determined by the committee
administering the Incentive Stock Option Plan. The Company's Board of Directors
and initial shareholders have also adopted a Non Qualified Stock Option Plan
(the "Non Qualified Stock Option Plan" and, together with the Incentive Stock
Option Plan, the "Option Plans"). The Option Plans permit the Company to grant
options to certain key officers, directors and key employees of the Company and
the Bank. The Company has authorized the issuance of 100,000 shares under the
Option Plans. The options authorized under the Incentive Stock Option Plan
include the options the Company will be obligated to issue to Mr. Padget under
the terms of his employment agreement. See "Management--Employment Agreement."
Exercise of these options could have a dilutive effect on the shareholders'
interest in the Company's earnings and book value. In addition, the Company may
issue additional stock options, shares of Common Stock or preferred stock in the
future. Any such stock offering by its nature could be dilutive to the holdings
of subscribers in the Offering.

CAPITALIZATION

The following table sets forth the proforma capitalization of the
Company as of March 31, 1998, as adjusted to give effect to the sale of 200,000
Units in the Organizers' Offering and the proforma consolidated capitalization
of the Company and the Bank, as adjusted to give effect to the sale of 900,000
shares of Common Stock in the Offering.

8
<PAGE> 14

<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
-----------------------------
PRO FORMA PRO FORMA
--------- ---------
AS ADJUSTED(1)
-----------
<S> <C> <C>
Current maturities of long-term debt and capital lease obligations $ 11,700 $ 11,700
Long-term debt, less current maturities 42,854 42,854
----------- ------------
Total long-term debt $ 54,554 $ 54,554
=========== ============
Shareholders' Equity:
Common Stock, par value $1.00 per share: 10,000,000 shares
authorized; 200,000 shares issued and outstanding; 1,100,000
shares issued ($10 each) and outstanding as adjusted(1) $ 200,000 $ 1,100,000
Preferred Stock, par value not stated; 10,000,000 shares authorized,
no shares issued and outstanding ................................. -- --
Additional paid-in capital(2) ...................................... 1,800,000 9,125,000
Accumulated deficit(3) ............................................. (150,000) (150,000)
----------- ------------
Total shareholders' equity .................................. $ 1,850,000 $ 10,075,000
=========== ============

TOTAL CAPITALIZATION $ 1,904,554 $ 10,129,554
=========== ============
</TABLE>

- ---------
(1) Does not include shares of Common Stock issuable upon the exercise of the
Warrants or pursuant to options that have been or may be granted under the
Option Plans. See "Organizers' Offering," "Management--Incentive Stock
Option Plan" and "Management--Non-Qualified Stock Option Plan."
(2) The underwriting discount and expenses of the Offering will be charged
against this account. These expenses are estimated to be $775,000, and such
amount was used in the calculation of the amount shown in the "As Adjusted"
column.
(3) The "As Adjusted" deficit accumulated during the pre-opening stage results
from expensing estimated pre-opening expenses for the Bank of $150,000.
These expenses consist primarily of operational expenses, salaries and
employee benefits. See "Use of Proceeds--By the Bank." Pre-opening expenses
will be charged against operating results and are estimates. Actual
pre-opening expenses may be higher. Higher actual pre-opening expenses
would increase the deficit accumulated during the pre-opening stage and
thereby further reduce shareholders' equity.

DIVIDENDS

The Bank will be restricted in its ability to pay dividends under the
national banking laws and by regulations of the OCC. The Company and the Bank
are subject to various general regulatory policies and requirements relating to
the payment of dividends, including requirements to maintaining capital above
regulatory minimums. The appropriate regulatory authority is authorized to
determine, under certain circumstances relating to the financial condition of
the Bank or the Company, that the payment of dividends would be an unsafe or
unsound practice and to prohibit payment thereof. See "Supervision and
Regulation--Dividends."

9
<PAGE> 15

PROPOSED PLAN OF OPERATIONS

The Company is still in a development stage and will have no
operational business until the Bank commences operations. The Company believes
that the net proceeds of the Offering should satisfy the Company's and the
Bank's cash requirements for at least the 12 month period following the opening
of the Bank. Accordingly, the Company does not anticipate that it will be
necessary to raise additional funds for the operation of the Company and the
Bank over the next 12 months. For additional information regarding material
expenditures during such period, see "Use of Proceeds." For additional
information regarding the plan of operations for the Company and the Bank, see
"Proposed Business of the Company and the Bank" and "Management."

PROPOSED BUSINESS OF THE COMPANY
AND THE BANK

THE COMPANY

The Company was incorporated as a business corporation under the laws
of the State of Georgia on November 5, 1997, primarily to serve as a bank
holding company by capitalizing the Bank with $9,600,000. As a result, the Bank
will issue all of its common stock to the Company, and the Company will be the
Bank's sole shareholder. Initially, the Bank will be the sole operating
subsidiary of the Company. The Company will apply to the Federal Reserve and the
Department of Banking for prior approval to capitalize the Bank. If such
approvals are granted, upon the receipt of the common stock of the Bank, the
Company will become a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as amended (the "BHCA"), and the Georgia Bank
Holding Company Act (the "Georgia BHC Act"). See "Supervision and
Regulation--Bank Holding Company Regulation."

The Company has been organized to facilitate the Bank's ability to
serve its future customers' requirements for financial services. The holding
company structure will provide flexibility for expansion of the Company's
banking business through the possible acquisition of other financial
institutions and the provision of additional capital and banking-related
services which are permissible for bank holding companies and for national
banks. A holding company structure will facilitate the future raising of capital
for the Bank because the Company will be able to issue securities without the
need for prior banking regulatory approval and the proceeds of debt securities
issued by the Company can be invested in the Bank as primary capital.

The Company has no present plans to acquire any operating subsidiaries
other than the Bank. It is expected, however, that the Company may make
additional acquisitions in the future in the event that the Company becomes
profitable and such acquisitions are deemed to be in the best interest of the
Company and its shareholders. Such acquisitions, if any, will be subject to
certain regulatory approvals and requirements. See "Supervision and Regulation."

THE BANK

General. The Organizers filed applications on behalf of the Bank with
the OCC and with the FDIC on December 8, 1997 for authority to organize as a
national bank, the deposits of which will be federally insured, and to conduct a
commercial banking business from Alpharetta, Georgia. The Bank will not be
authorized to conduct its banking business until it obtains a charter from the
OCC. The issuance of the charter will depend, among other things, upon the
Bank's receiving at least $9,600,000 in capital from the Company and upon
compliance with certain standard conditions expected to be imposed by the FDIC
and the OCC which are generally designed to familiarize the Bank with certain
applicable operating requirements and to prepare the Bank to commence business
operations. The OCC requires that a new national bank open for business (i.e.,
obtain a charter) within 18 months after receipt of preliminary approval from
the OCC. As of March 30, 1998, the applications filed with the OCC and the FDIC
were pending.

Philosophy. The Bank's philosophy with respect to its initial
operations will be to emphasize prompt and responsive personal service to the
residents of Alpharetta, Georgia and the other communities located in north
Fulton County in order to attract customers and acquire market share now
controlled by other financial institutions

10
<PAGE> 16

in the Bank's market area. The Company believes that local ownership and control
will aid the growth and success of the Bank.

Management of the Bank intends to implement an active officer and
director call program to promote these efforts. The purpose of this call program
will be to describe the products, services and philosophy of the Bank to both
existing and new business prospects. Most of the officers and directors of the
Company are active members in the north Fulton community, and their continued
active community involvement will provide an opportunity to promote the Bank and
its products and services. The officers and directors of the Company intend to
utilize effective advertising and selling efforts in order to build a distinct
institutional image for the Bank and to capture a customer base.

Bank Location and Facilities. The Bank will be located in Alpharetta,
Georgia in Fulton County. The Bank site is located on the east side of Georgia
Highway 400 at the intersection of Mansell Road and North Point Parkway. The
building is currently under construction, with a completion date set for March
1998. The building will be a one-story brick facility which will house three
businesses. The Bank will have the central location with a small business on
each side. The Bank will occupy 3,639 square feet of the total 19,600 square
feet of the building. The space to be occupied by the Bank is being built out to
the Bank's specifications.

This location offers high visibility in a high traffic area just south
of North Point Mall. The Bank site will be neighbor to a large retail power
center. This area is the central location for business, residential, commuting
and shopping in north Fulton County with proximity to Georgia Highway 400.

The Bank entered into a Shopping Center Form Lease (the "Lease") dated
March 23, 1998, which provides that the Bank may lease the building for a term
of five years beginning April 1, 1998. The Lease provides that the Bank has the
option to renew the Lease for two additional three-year terms.

Primary Service Area. The Bank's PSA represents a geographic area which
includes Sandy Springs, Dunwoody, Roswell and Alpharetta. The boundaries of the
PSA are represented by the Fulton County/Forsyth County line on the north, the
Fulton County/Gwinnett County line on the east, Interstate 285 on the south and
the Fulton County/Cobb County line on the west. Areas of the PSA are located
within 15 to 30 minutes drive time from Buckhead and downtown Atlanta and 30 to
45 minutes drive time from the north Georgia mountains and Lake Lanier.

Economic and Demographic Factors. The PSA represents a diverse suburban
market made up of older home communities, new golf club communities, municipal
facilities, two major shopping malls, numerous dining amenities, growing public
and private schools, headquarter locations of major national and international
companies and numerous small businesses. The cities of Alpharetta and Roswell
are the key economic focal points of the PSA. According to estimates released by
the U.S. Census Bureau on November 18, 1997, Alpharetta ranked second in Georgia
in terms of population growth between 1990 and 1996, representing a 57.5%
change. Roswell ranked twelfth with a population change of 15.6%. The aggregate
population of the PSA reported by the U.S. Census totaled 182,502 in 1990, is
estimated to be 232,098 in 1996 and is projected to be 264,672 by 2001. The
median family income was $78,592 for 1996 and is projected to be $92,983 by
2001. The median age of the adult population is 42.6 years.

The strength of the economy in north Fulton County relies on its large,
diversified small business community. The small business community makes up 85%
of the membership of the Greater North Fulton Chamber of Commerce. Another
significant economic factor of the PSA is the shopping and retail establishments
located at North Point Mall. The one mile stretch of land located east of
Georgia Highway 400 between Mansell Road and Haines Bridge Road represents one
of the largest commercial retail shopping areas in Georgia. Its major focal
point is North Point Mall, which is anchored by six major department stores and
180 specialty shops. The Bank will be located at the southern entrance of this
retail/commercial area.

Competition. The banking business in highly competitive. The Bank will
compete as a financial intermediary with other commercial banks, savings and
loan associations, credit unions, and money market mutual funds operating in the
Atlanta area. As of March 30, 1998, the north Fulton County area was served by 9
commercial banks with a total of 60 offices. A number of these competitors are
well established in the north Fulton

11
<PAGE> 17

County area. Most of them have substantially greater resources and lending
limits than the Bank and other certain services, such as extensive and
established branch networks and trust services, that the Bank does not expect to
provide initially. As a result of these competitive factors, the Bank may have
to pay higher rates of interest to attract deposits or extend less favorable
terms (including lower interest) to attract loans.

The regional bank holding companies represented in the PSA are:
NationsBank, N.A., which is the largest with a deposit market share of 26.63%,
Wachovia Bank of Georgia with the second largest market share of 14.40%, First
Union National Bank of Georgia, SunTrust Bank, SouthTrust Bank of Georgia,
Regions Bank and Colonial Bank. The larger regional banks' presence in the
Bank's PSA is through branch offices, with many of the customer service
functions, as well as authority for loan approval, being located outside of the
Bank's PSA. There are several community banks located in the Bank's PSA;
however, the Bank intends to differentiate itself from these banks primarily
through personal service and strong involvement in the north Fulton County
community. There are also two other de novo banks in the Bank's PSA.

Historical Deposit Trends. The following table shows a comparison of
deposit mix between the two independent community banks in the Bank's PSA and
the de novo banks chartered since 1995 in the state of Georgia:

<TABLE>
<CAPTION>
Peer Group Deposit Mix
----------------------
PSA Peer Georgia de novo Peer
Banks Banks
----- -----
<S> <C> <C>
Demand deposits 18% 11%
Interest checking 8% 18%
MMA and savings 18% 17%
Time accounts 56% 54%
</TABLE>

Lending Policy. The Bank intends to emphasize a range of lending
services, including commercial, real estate and consumer loans, to small-to
medium-sized businesses and professional concerns and individuals that are
located in or conduct a substantial portion of their business in the Bank's PSA.

Loan Approval and Review. The Bank's loan approval policies will
provide for various levels of officer lending authority. When the amount of
aggregate loans to a single borrower exceeds that individual officer's lending
authority, the loan request will be considered and approved by an officer with a
higher lending limit or the Loan Committee. The Bank will not make any loans to
any director or executive officer of the Bank unless the loan is approved by the
Board of Directors of the Bank and is made on terms not more favorable to such
person than would be available to a person not affiliated with the Bank.

Lending Limits. The Bank's lending activities will be subject to a
variety of lending limits imposed by federal law. While differing limits apply
in certain circumstances based on the type of loan or the nature of the borrower
(including the borrower's relationship to the Bank), in general, the Bank will
be subject to a loan-to-one-borrower limit of an amount equal to 15% of the
Bank's unimpaired capital and surplus or 25% of the unimpaired capital and
surplus if the excess over 15% is within the guidelines set forth in 12 U.S.C.
Section 84 as an exception to the 15% limit. Based on the proposed minimum
initial capitalization of the Bank and its projected pre-opening expenses, the
Bank's initial lending limit will be approximately $1,365,000 for loans not
fully secured plus an additional $910,000 (or an aggregate of approximately
$2,275,000) for loans which meet the 12 U.S.C. Section 84 guidelines. The Bank
has not yet established any minimum or maximum loan limits other than the
statutory lending limits described above. These limits will increase or decrease
as the Bank's capital increases or decreases as a result of the Bank's earnings
or losses, among other reasons. Unless the Bank is able to sell participations
in its loans to other financial institutions, the Bank will not be able to meet
all of the lending needs of loan customers requiring aggregate extensions of
credit above these limits.

Consumer Loans. The Bank will make a variety of loans to individuals
for personal and household purposes, including secured and unsecured installment
and term loans, home equity loans and lines of credit, and revolving lines of
credit such as credit cards. These loans typically will carry balances of less
than $25,000 and, in

12
<PAGE> 18

the case of non-revolving loans, be amortized over a period not exceeding 60
months, in many cases bearing interest at a fixed rate. The revolving loans will
typically bear interest at a fixed rate and require monthly payments of interest
and a portion of the principal balance. The underwriting criteria for home
equity loans and lines of credit will generally be the same as applied by the
Bank when making a first mortgage loan, as described above, and home equity
lines of credit will typically expire ten years or less after origination. As
with the other categories of loans, the principal economic risk associated with
consumer loans is the creditworthiness of the Bank's borrowers. Borrower
creditworthiness is affected by general economic conditions, including
unemployment rates, interest rates, consumer bankruptcy rates and levels of
consumer spending. The principal competitors for consumer loans will be the
established banks in the north Fulton County area.

Real Estate Loans. The Bank will make commercial real estate loans,
construction and development loans, and residential real estate loans in and
around the Bank's PSA. These loans include certain commercial loans where the
Bank takes a security interest in real estate out of an abundance of caution and
not as the principal collateral for the loan, but will exclude home equity
loans, which are classified as consumer loans. Loan terms generally will be
limited to five years or less, although payments may be structured on a longer
amortization basis. Interest rates may be fixed or adjustable. The Bank will
generally charge an origination fee. Management will attempt to reduce credit
risk in the commercial real estate portfolio by emphasizing loans on
owner-occupied office and retail buildings where the loan-to-value ratio,
established by independent appraisals, does not exceed 80%. In addition, the
Bank may require personal guarantees of the principal owners of the property
backed with a review by the Bank of the personal financial statements of the
principal owners. The principal economic risk associated with each category of
anticipated loans, including real estate loans, is the creditworthiness of the
Bank's borrowers. The risks associated with real estate loans vary with many
economic factors, including employment levels and fluctuations in the value of
real estate, new job creation trends, tenant vacancy rates and the quality of
the borrower's management. The Bank will compete for real estate loans with a
number of bank competitors which are well established in the Bank's PSA. Most of
these competitors have substantially greater resources and lending limits than
the Bank. As a result, the Bank may have to charge lower interest rates to
attract borrowers.

The Bank may also originate mortgage loans for sale into the secondary
market. The Bank intends to limit interest rate risk and credit risk on these
loans by locking the interest rate for each loan with the secondary investor and
receiving the investor's underwriting approval prior to originating the loan.

Commercial Loans and Leases. It is expected that loans for commercial
purposes in various lines of businesses will be one of the primary components of
the Bank's loan portfolio. The terms of such loans vary by their purpose and
underlying collateral (if any). Equipment loans and leases will typically be
made for a term of five years or less at fixed or variable rates, with the loan
or lease fully amortized over the term and secured by the financed equipment and
with a loan-to-value ratio of 80% or less and a lease-to-value ratio of 92% or
less. Loans to support working capital will typically have terms not exceeding
one year and will usually be secured by accounts receivable, inventory or
personal guarantees of the principals of the business. For loans secured by
accounts receivable or inventory, principal will typically be repaid as the
assets securing the loan are converted into cash, and in other cases, principal
will typically be due at maturity. The principal economic risk associated with
each category of anticipated loans, including commercial loans, is the
creditworthiness of the Bank's borrowers, which in turn is affected by general
economic conditions and the strength of the services and retail market segments.
In addition, the quality of the borrower's management and its ability to
properly evaluate changes in the supply and demand characteristics affecting its
respective markets for products and services and to effectively respond to such
changes are significant factors in the creditworthiness of a commercial
borrower. General economic factors affecting a borrower's ability to repay
include interest, inflation and employment rates, as well as other factors
affecting a borrower's customers, suppliers and employees. The well established
banks in the Bank's PSA will make proportionately more loans to medium-to-large
sized businesses than the Bank. Many of the Bank's anticipated commercial loans
will likely be made to small-to-medium-sized businesses who may be less able to
withstand competitive, economic and financial conditions than larger borrowers.

Other Banking Services. Other anticipated bank services include cash
management services, safe-deposit boxes, travelers checks, direct deposit of
payroll and social security checks, and automatic drafts for various accounts.
The Bank plans to become associated with a shared network of automated teller
machines that may be used by Bank customers throughout Georgia and other
regions. The Bank plans to offer annuities, mutual funds and other financial
services through a third party which has not, as yet, been chosen by the Bank.
The Bank also plans

13
<PAGE> 19

to offer MasterCard and VISA credit card services through a correspondent bank
as an agent for the Bank. The Bank does not plan to exercise trust powers during
its initial years of operation. The Bank may in the future offer a full-service
trust department, but cannot do so without the prior approval of the OCC.

The Bank will also offer to its targeted commercial customers a courier
service that will pick up non-cash deposits and minimal cash deposits of up to
$200 from the customer's place of business and deliver it to the Bank. The Bank
believes that this will be an important service for its customers because the
Bank will initially have one location. The Bank will contract with a third party
courier service which has been approved by the Georgia Public Service Commission
for bank-related work.

Investments. In addition to loans, the Bank will make other investments
primarily in obligations of the United States or obligations guaranteed as to
principal and interest by the United States and other taxable securities. No
investment in any of those instruments will exceed any applicable limitation
imposed by law or regulation.

Deposits. The Bank will seek to establish solid core deposits,
including checking accounts, money market accounts, a variety of certificates of
deposit and IRA accounts. The primary means used to attract deposits will be an
aggressive marketing plan in the overall service area, a broad product line and
competitive services. The primary sources of deposits will be residents of, and
businesses and their employees located in, the Bank's PSA obtained through
personal solicitation by the Bank's officers and directors, direct mail
solicitations and advertisements published in the local media. Deposits will be
generated by offering a broad array of competitively priced deposit services,
including demand deposits, regular savings accounts, money market deposits
(transaction and investment), certificates of deposit, retirement accounts and
other deposit or funds transfer services which may be permitted by law or
regulation and which may be offered to remain competitive in the market.

Asset and Liability Management. The Bank intends to manage its assets
and liabilities to provide an optimum and stable net interest margin, a
profitable after-tax return on assets and return on equity and adequate
liquidity. These management functions will be conducted within the framework of
written loan and investment policies which the Bank will adopt. The Bank will
attempt to maintain a balanced position between rate sensitive assets and rate
sensitive liabilities. Specifically, it will chart assets and liabilities on a
matrix by maturity, effective duration and interest adjustment period and
endeavor to manage any gaps in maturity ranges.

Employees. Upon commencement of operations, the Bank is expected to
have approximately nine full-time employees and three part-time employees. The
Company is not expected to have any employees who are not also employees of the
Bank.

H. N. Padget, Jr. will be the President and Chief Executive Officer of
the Company and the Bank and Chief Lending Officer of the Bank. Mr. Padget has
over 20 years of banking experience, including extensive administration and
retail banking experience. See "Management--Proposed Company Officers and
Directors; Proposed Bank Officers and Directors."

MANAGEMENT

PROPOSED COMPANY OFFICERS AND DIRECTORS; PROPOSED BANK OFFICERS AND DIRECTORS

The following table sets forth, for the initial members of the Board of
Directors of both the Company and the Bank, (i) their names, addresses and ages
at __________, 1998, (ii) the positions they will hold in the Company and the
Bank, (iii) the number of shares of Common Stock they beneficially own, (iv) the
number of Warrants they have received pursuant to the Organizers' Offering and
(v) the percentage of outstanding shares beneficially owned after the Offering.

14
<PAGE> 20

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
POSITIONS NUMBER WARRANTS OUTSTANDING
NAME AND ADDRESS (AGE) TO BE HELD OF SHARES SHARES
- ---------------- ----- ---------- --------- --------- ------
<S> <C> <C> <C> <C> <C>
Class I Directors:

Patricia R. Grimes (49) Director 12,500 12,500 1.1%
4385 Old Wesleyan Woods
Alpharetta, GA 30022

Heber N. Padget, Sr. (66) Director 22,500 22,500 2.0
128 Mt. View Drive, NW
Gainesville, GA 30501

John A. Pond (50) Director 15,000 15,000 1.4
c/o Armour, Cape & Pond, Inc.
2635 Century Parkway
Suite 800
Atlanta, GA 30345

Reid W. Simmons (50) Director 12,500 12,500 1.1
8660 River Trace
Roswell, GA 30076

W. David Sweatt (50) Chairman of the Board and 50,000 50,000 4.5
1580 Warsaw Rd. Director
Roswell, GA 30076

Class II Directors:

David R. Hink (49) Director 15,000 15,000 1.4
c/o Strategic Solutions Group,
Inc.
165 Willow Brook Drive
Roswell, GA 30076

Mary E. Johnson (45) Director 12,500 12,500 1.1
c/o T. Stephen Johnson &
Assoc.
9755 Dogwood Road, Suite 310
Roswell, GA 30075

Robert W. Johnston (46) Director 10,000 10,000 .9
c/o Koala Enterprises
2880 Holcomb Bridge Road
Building 90B, Suite 579
Alpharetta, GA 30202

H.N. Padget, Jr. (42) President, Chief 5,000 5,000 .5
c/o Chattahoochee National Executive Officer, Chief
Bank (In formation) Lending Officer (1) and
1303 Hightower Trail, Suite 130 Director
Atlanta, Georgia 30350
</TABLE>

15
<PAGE> 21

<TABLE>
<S> <C> <C> <C> <C> <C>
Class III Directors:

Michael L. Aldredge (45) Director 10,000 10,000 .9
c/o Aldredge Properties
6095 Lake Forrest Drive
Suite 200
Atlanta, Georgia 30329

C. Dan Alford (37) Director 10,000 10,000 .9
c/o A&C Enercom, Inc.
1777 Northeast Expressway
Atlanta, Georgia 30094

William H. Groce, Jr. (61) Secretary and Director 15,000 15,000 1.4
8250 Overview Court
Roswell, Georgia 30076

W. Darrell Sumner (49) Director 10,000 10,000 .9
c/o Bank Assets, Inc.
9755 Dogwood Rd.
Suite 310
Roswell, GA 30075

All Proposed Directors and
Officers as a Group (13)............ 200,000 200,000 18.2%
</TABLE>

- ------------
(1) Bank only.

Each of the above persons has been a director of the Company since
November 5, 1997 and is a proposed director of the Bank. The Company has a
staggered Board of Directors whereby one-third of the directors will be elected
each year at the Company's annual meeting of shareholders. Upon such election,
each director of the Company will serve for a term of three years. The terms of
Patricia R. Grimes, Heber N. Padget, Sr., John A. Pond, Reid W. Simmons and W.
David Sweatt, as Class I directors, expire in 1998, the terms of David R. Hink,
Mary E. Johnson, Robert W. Johnston and H.N. Padget, Jr., as Class II directors,
expire in 1999 and the terms of Michael L. Aldredge, C. Dan Alford, William H.
Groce, Jr., and W. Darrell Sumner, as Class III directors, expire in 2000. See
"Description of Capital Stock of the Company--Certain Provisions of the Articles
of Incorporation and Bylaws." The Company's officers are appointed by the Board
of Directors and hold office at the will of the Company's Board.

Each of the Bank's proposed directors will, upon approval of the OCC,
serve until the Bank's first shareholders meeting, which meeting will be held
shortly after the Bank receives its charter. It is anticipated that each
proposed director will be nominated to serve as director of the Bank at that
meeting. After the first shareholders meeting, directors of the Bank will serve
for a term of one year and will be elected by the Company, as the sole
shareholder of the Bank, each year at the Bank's annual meeting of shareholders.
The Bank's officers will be appointed by its Board of Directors and will hold
office at the will of the Bank's Board.

Michael L. Aldredge. Mr. Aldredge has served as Operations Manager and
Secretary of Squire Inn, Inc. since 1990. From 1975 to 1990, he served as
General Manager of Squire Inns' three different hotels. Mr. Aldredge is also a
partner in KAL Jax Hotel, LTD, where he serves as Managing Partner of Days Inn
Jacksonville Beach Resort. Mr. Aldredge also serves in a partnership capacity
and as Secretary of AAA Cigarette Co., a vending machine company. He received a
BBA degree from the University of Georgia in 1975. Mr. Aldredge serves as an
Executive Board member of Sandy Springs Revitalization, Inc. He also served as
Transportation Committee member of the Sandy Springs Revitalization Plan that
was submitted to the Fulton County Board of Commissioners. Mr. Aldredge is a
Committee Chairman of the Copeland Road Owners Association, an organization
developed for the rejuvenation and upgrading of the area around Copeland Road
and Roswell Road, and works closely with the Fulton County Police "COPS"
Program. Mr. Aldredge has also served as Program Chairman and twice as the Vice
Chairman for the Cobb GM Forum, a hotel general managers association. Mr.
Aldredge served on the Woodward

16
<PAGE> 22

North Steering Committee. He is a native of Atlanta and has lived in the Bank's
PSA for over 15 years. Mr. Aldredge is a member of the Loan Committee of the
Bank.

C. Dan Alford. Mr. Alford has served as the Executive Vice President
and Chief Operating Officer of A&C Enercom, Inc., a subsidiary of Intellisource,
Inc., a Safeguard Securities company since 1992. He has served on several boards
including A&C Enercom, Inc., Cape & Companies and Independent Funeral Home
Resources. Mr. Alford received his BS degree in Electrical Engineering from the
Georgia Institute of Technology. He is a native of Atlanta. Mr. Alford is a
member of the Audit Committee of the Company and the Audit, Compliance and
Community Reinvestment Act Committee of the Bank.

Patricia Rhodes Grimes. Ms. Grimes has been retired from SunTrust
Service Corporation since 1992. She has extensive banking experience and has
held various management level positions with SunTrust Service Corporation and
Trusco Data Systems, a division of Trust Company of Georgia. Most recently, Ms.
Grimes served as Senior Vice President and Manager of the Application Systems
Division with SunTrust Service Corporation, a subsidiary of SunTrust Banks, Inc.
She also held positions with Trusco Data Systems, including Group Vice President
and Assistant Manager of Systems and Programming, Vice President and Section
Manager of Deposits, Financial and Human Resources Systems, Systems Officer and
Project Leader of the Demand Deposit System, and programmer/analyst for Deposit
Applications. Ms. Grimes served on the MIS Advisory Board for the University of
Georgia. Ms. Grimes received a degree in Mathematics from the University of
Georgia. Ms. Grimes is a native of Atlanta, and she has lived in the Bank's PSA
for 17 years. Ms. Grimes is the Chairman of the Audit Committee of the Company
and the Audit, Compliance and Community Reinvestment Act Committee of the Bank.

William H. Groce, Jr. Mr. Groce is a retired executive from BellSouth
Telecommunications. Mr. Groce held various positions at BellSouth
Telecommunications throughout his career which began in 1958, including
Executive Assistant to the President of BellSouth Telecommunications and
Secretary to its Board of Directors from 1988 until his retirement in 1994. From
1986 to 1988, Mr. Groce served as Assistant Vice President, Regulatory Matters.
Mr. Groce received a BS degree in Business Administration from the University of
North Carolina, Chapel Hill. Mr. Groce served as a member of the board of the
Chamber of Commerce in Asheville, North Carolina. Mr. Groce has lived in the
Bank's PSA for 15 years. Mr. Groce is the Secretary of the Company, the Chairman
of the Compensation Committee of the Company and the Asset/Liability Management
Committee of the Bank.

David R. Hink. Mr. Hink has been the Managing Principal of Strategic
Solutions Resources since December 1996. From 1995 to 1996, Mr. Hink served as
President of the MarKit Division of Severn Trent Systems, a software company.
From 1993 to 1995, Mr. Hink was employed with A&C Enercom, Inc., where he served
as Senior Vice President and was responsible for their information technology
group of companies, comprised of Entec Consulting and the Market Applications
Group. From 1990 to 1993, Mr. Hink served as Senior Vice President and Chief
Development Officer for Cape & Companies. Mr. Hink received a BS degree in
Electrical Engineering, a BA degree in Business Administration and an MBA degree
in Management and Finance from the University of Wisconsin. He has lived in the
Bank's PSA area for over 8 years. Mr. Hink is a member of the Compensation
Committee of the Company and the Loan Committee of the Bank.

Mary E. Johnson. Ms. Johnson has served as the Controller of T. Stephen
Johnson & Associates ("TSJ&A") and its related entities since 1987. She also
serves as the Corporate Secretary to the Board of Directors of Net.B@nk, Inc.,
the parent company of Atlanta Internet Bank. Ms. Johnson has been involved in
various organizations, including as a member of the Auxiliary of Egleston
Children's Hospital, as the Past President of Horseshoe Bend Twigs, a
neighborhood fund raising extension of Egleston Children's Hospital, and as a
member of Beta Sigma Phi, a community services organization. Ms. Johnson has
lived in the Bank's PSA for over 15 years. Ms. Johnson is a member of the
Marketing Committee of the Bank.

Robert W. Johnston. Mr. Johnston is a consultant to the staffing
services industry through his investment in Koala Enterprises, Inc. since 1978.
From 1974 to 1978, he was a Retail Marketing Manager, Bank Card Division at
First National Bank of Atlanta (now Wachovia Bank). Mr. Johnston received a
Bachelor's degree from Duke University. He served as President of the Georgia
Association of Temporary Services and the Johnson Estates Homeowners
Association. He serves as a member of the Board of Directors of the Horseshoe
Bend Homeowners Association. Mr. Johnston has lived in the Bank's PSA for 12
years. He is a member of the Marketing Committee of the Bank.

17
<PAGE> 23

H.N. Padget, Jr. Mr. Padget is the proposed President and Chief
Executive Officer of the Bank. He has been a banker in metropolitan Atlanta for
over 20 years and has served in various management positions throughout his
career. Mr. Padget most recently served as Executive Vice President of Milton
National Bank, Alpharetta, Georgia from 1993 through October of 1997. Mr. Padget
served as Group Vice President of Georgia Federal Bank from 1988 to 1993. Mr.
Padget served as Vice President of National Bank of Georgia from 1981 to 1988.
Mr. Padget began his banking career with Gainesville National Bank, Gainesville,
Georgia where he served as Assistant Vice President from 1979 to 1981. Mr.
Padget was an Assistant National Bank Examiner with the OCC from 1978 to 1979.
Mr. Padget received a B.S. in Financial Management at Clemson University. He
also attended the National Commercial Lending School and the National Commercial
Lending Graduate School in Norman, Oklahoma. Mr. Padget has lived in the Bank's
PSA for 20 years. Mr. Padget is the son of Heber N. Padget, Sr.

Heber N. Padget, Sr. Heber Padget has been retired from the farming
business he started in 1962 since 1991. He owns the Padget Cattle Company and
Wauka Chick Company, both farming-related businesses. Mr. Padget has lived in
Gainesville, Georgia for 40 years. He served for six years on the Gainesville
Planning Commission. Mr. Padget received a Bachelor of Science degree from
Clemson University. He served in the United States Army Reserves for 26 years
and retired as a Lieutenant Colonel. Mr. Padget is a member of the
Asset/Liability Management Committee of the Bank. Mr. Padget is the father of
H.N. Padget, Jr.

John A. Pond. Mr. Pond has been the President of Armour Cape & Pond, an
engineering and architectural services company, since 1987. He holds a
Professional Engineer license as well as a Professional Land Surveyor license.
Mr. Pond received a B.S. in Civil Engineering from the Virginia Military
Institute. In addition, he received an ME degree in Civil Engineering from the
University of Virginia, Charlottesville. Mr. Pond serves as a member of the
Advisory Council of the Georgia Tech Economic Development Institute. He serves
as a member of Senator Paul Coverdale's Small Business Task Force. He is a
former designee of Leadership Atlanta and has also directed the campaign for
engineering firms in metro Atlanta for the United Way. Further, Mr. Pond has
been active in the Atlanta Heart Fund, High Point Civic Association, Consulting
Engineers Council of Georgia, Society of Marketing Professional Services,
Society of Professional Engineers, Society of American Military Engineers and
Professional Services Management Association, Northside Methodist Church and the
VMI Alumni Association. He has lived in the Atlanta area for 20 years. Mr. Pond
is a member of the Marketing Committee of the Bank.

Reid W. Simmons. Mr. Simmons has been the President, founder and
co-owner of OMSystems, Inc. (Orthotrac), a leading provider of computer hardware
and software for orthodontists since 1981. From 1970 until 1981, he held various
sales and management positions with NCR Corporation including Regional Director
and National Director of Large Computer Systems. Mr. Simmons received a degree
in Industrial Management from the Georgia Institute of Technology. Mr. Simmons
is a member of Commissioner Bob Fulton's SPARC (Strategic Planning and Review
Committee) and has been elected to the Board of the Horseshoe Bend Community
Association for nine years - the last seven years as its President. He has
served as President of the St. Jude's Home-School Association and has been
involved in fund raising activities for various charities. He has lived in the
Bank's PSA for over 32 years. Mr. Simmons is a member of the Audit Committee of
the Company and the Marketing Committee and the Audit, Compliance and Community
Reinvestment Act Committee of the Bank.

W. Darrell Sumner. Mr. Sumner has been the President and co-founder of
Bank Assets, Inc., a firm that specializes in marketing, designing and
implementing compensation and benefit programs for financial institutions since
1992. He has over 25 years of experience in the banking and financial services
industry. His previous experience includes serving as President of Capital South
Group, a commercial finance company, Senior Vice President of Southern/NCNB
National Bank and Vice President of Citizens & Southern National Bank.
Previously, he served as Chairman of the Matching Gifts Committee for the
Georgia Tech Alumni Roll Call and as United Way Chairman and Trustee for
Citizens & Southern National Bank. Mr. Sumner received a B.S. in Industrial
Management from the Georgia Institute of Technology. He is a 30 year resident of
Atlanta. Mr. Sumner is a member of the Compensation Committee of the Company and
the Loan Committee and Asset/Liability Management Committee of the Bank.

W. David Sweatt. Mr. Sweatt is the Chairman of the Bank. From 1996
through 1997, Mr. Sweatt managed personal investments. From 1993 until the
company was sold in 1996, Mr. Sweatt was an organizer, director and President
and Chief Executive Officer of Royal Bankshares of Acadiana, Inc., Lafayette,
Louisiana, a registered

18
<PAGE> 24

bank holding company which owned Bank of Lafayette and Trust Bank of the U.S., a
non-depository trust company. Mr. Sweatt simultaneously served as President and
Chief Executive Officer of both subsidiaries of the holding company. From 1984
to 1992, he was President and Chief Executive Officer of First National Bank of
Lafayette, Lafayette, Louisiana. Mr. Sweatt has also served as Senior Vice
President of Corporate Development for First Commerce Corporation in New
Orleans, Vice President/Manager of the Commercial Loan Department and of the
International Department for First National Bank of South Carolina, Columbia,
South Carolina, and Executive Vice President/Chief Administrative Officer,
Director of Management Development and Training, and International Officer for
First Tennessee Bank, Inc., Memphis, Tennessee and its subsidiaries in Knoxville
and Memphis. Mr. Sweatt received a BA in Political Science from Davidson College
and an MA in Diplomacy and International Commerce from the University of
Kentucky, Lexington. He has been involved in various activities throughout his
career including: Adjunct Professor, Graduate Business School at the University
of South Carolina, Member, Board of Trustees, University of Southwestern
Louisiana Foundation, Advisory Board, University of Southwestern Louisiana
College of Business, Chairperson, Citizens Committee on School Finance,
Lafayette Parish School Board, and Chairperson, Long-Range Planning Committee of
the Downtown Development Authority, Lafayette, Louisiana. Mr. Sweatt has lived
in the Bank's PSA for 1 1/2 years. He is the Chairman of the Loan Committee of
the Bank.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company. The Compensation Committee establishes remuneration levels
for officers of the Company, reviews management organization and development,
reviews significant employee benefit programs and establishes and administers
executive compensation programs, including the Option Plans. The Compensation
Committee consists of William H. Groce, Jr., David R. Hink and W. Darrell
Sumner.

The Audit Committee recommends to the Board of Directors the
independent public accountants to be selected to audit the Company's annual
financial statements and approves any special assignments given to such
accountants. The Audit Committee also reviews the planned scope of the annual
audit, any changes in accounting principles and the effectiveness and efficiency
of the Company's internal accounting staff. The Audit Committee consists of C.
Dan Alford, Patricia Rhodes Grimes and Reid W. Simmons.

The Bank. The Loan Committee reviews any loan request made by a
potential borrower over a certain credit threshold for compliance with the
Bank's lending policies and federal and state rules and regulations governing
extensions of credit to such parties and makes a decision whether to extend
credit to such potential borrower. The Loan Committee consists of Michael L.
Aldredge, David R. Hink, W. Darrell Sumner and W. David Sweatt.

The Audit, Compliance and Community Reinvestment Act Committee provides
oversight to the Bank's internal audit function and compliance with regulatory
rules and regulations. The Audit, Compliance and Community Reinvestment Act
Committee consists of C. Dan Alford, Patricia Rhodes Grimes and Reid W. Simmons.

The Asset/Liability Management Committee provides guidance to the Bank
in balancing the yields and maturities in its loans and investments to its
deposits. The Asset/Liability Management Committee consists of William H. Groce,
Jr., Heber N. Padget, Sr. and W. Darrell Sumner.

The Marketing Committee provides ideas and assistance to the Bank in
marketing its services within the Bank's PSA. The Marketing Committee consists
of Mary E. Johnson, Robert W. Johnston, John A. Pond and Reid W. Simmons.

The Board of Directors may from time to time establish certain other
committees to facilitate the management of the Company.

EXECUTIVE COMPENSATION

The following table shows information for 1997 with regard to
compensation for services rendered in all capacities to the Company by the Chief
Executive Officer:

19
<PAGE> 25

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------------
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION($)
------------------ ---- ---------- --------- ---------------
<S> <C> <C> <C> <C>
H.N. Padget, Jr. 1997 $20,833 -0- -0-
CEO
</TABLE>

EMPLOYMENT AGREEMENT

On November 1, 1997, the Company and the Bank entered into an
employment agreement with H. N. Padget, Jr. regarding Mr. Padget's employment as
President and Chief Executive Officer of the Company (the "Employment
Agreement"). Under the terms of the Employment Agreement, Mr. Padget will
receive a salary of $125,000 per year with a 2 1/2% increase per year on the
anniversary date of the opening of the Bank. The Employment Agreement provides
that at the end of each year of operation, Mr. Padget will be entitled to
receive a cash bonus based on a performance matrix established against budgets.
Additionally, the Employment Agreement provides that the Company will grant Mr.
Padget incentive stock options to purchase up to 24,000 shares of Common Stock,
vesting ratably over 5 years at 20% per year, for each year of continued
employment, subject to achieving certain performance targets. Additionally, Mr.
Padget will be issued 6,000 incentive stock options upon the opening of the
Bank. The options will be granted at the market price of the Common Stock on the
day of the grant. Pursuant to the Employment Agreement, the Company has also
provided an automobile to be used by Mr. Padget. The period of employment
commences as of the date of receipt of the opening letter from the primary
regulator and continues for a period of 36 months thereafter except in the event
of (i) Mr. Padget's death or (ii) the inability to obtain a charter or opening
letter from the OCC or the FDIC. The employment may be terminated (i) at the
election of the Bank and the Company for cause; (ii) at Mr. Padget's election,
upon the Bank and the Company's breach of any material provision of the
Employment Agreement; or (iii) upon Mr. Padget's death or disability. In the
event that Mr. Padget's employment is terminated by the Company without cause,
(a) the Company will be required to meet its obligations under the Employment
Agreement for a period of 12 months from the date of termination with respect to
Mr. Padget's compensation and health and dental insurance coverage, and (b) Mr.
Padget will be prohibited from competing with the Bank or soliciting its
customers or employees within the geographic area set forth in the Employment
Agreement for a period of 12 months from the date of termination.

DIRECTOR COMPENSATION

The directors of the Company and the Bank, respectively, do not intend
to be separately compensated for their services as directors until the Company's
and the Bank's net profits exceed their net losses since inception on a
cumulative basis, at which time a compensation policy will be adopted by the
Company's Board and the Bank's Board in accordance with applicable law.

INCENTIVE STOCK OPTION PLAN

General. The Company's Board of Directors and initial shareholders have
adopted the Incentive Stock Option Plan to promote equity ownership of the
Company by key senior officers, key officers and other key employees of the
Company and the Bank, to increase their proprietary interest in the success of
the Company and to encourage them to remain in the employ of the Company.

Administration. The Incentive Stock Option Plan will be administered by
the Company's Compensation Committee (the "Committee"), which is comprised of at
least two non-employee directors appointed by the Company's Board of Directors,
or the Board of Directors in the event that there is not a Committee established
at any time during the term of any option granted under the Incentive Stock
Option Plan. The Committee or the Board of Directors, as the case may be, will
have the authority to select the key senior officers, key officers and other key
employees of the Company and the Bank to whom awards may be granted, to
determine the terms of each award, to interpret the provisions of the Incentive
Stock Option Plan and to make all other determinations that it may deem
necessary or advisable for the administration of the Incentive Stock Option
Plan.

20
<PAGE> 26

The Incentive Stock Option Plan provides for the grant of "incentive
stock options," as defined under Section 422(b) of the Internal Revenue Code of
1986, as amended. The Board of Directors has reserved 60,000 shares of Common
Stock for issuance under the Incentive Stock Option Plan. In general, if any
award granted under the Incentive Stock Option Plan expires, terminates, is
forfeited or is canceled for any reason, the shares of Common Stock allocable to
such award may again be made subject to an award granted under the Incentive
Stock Option Plan.

Awards. Key senior officers, key officers and other key employees of
the Company and the Bank are eligible to receive grants under the Incentive
Stock Option Plan. Awards may be granted subject to a vesting requirement and
may become fully vested upon a merger or change of control of the Company or may
apply with appropriate adjustments as determined by the Committee to the
securities of the resulting corporation. The exercise price of incentive stock
options must at least equal the fair market value of the Common Stock subject to
the option (determined as provided in the Incentive Stock Option Plan) on the
date the option is granted.

An incentive stock option granted under the Incentive Stock Option Plan
to an employee owning more than 10% of the total combined voting power or value
of all classes of capital stock of the Company or of any parent or subsidiary
corporation of the Company is subject to the further restriction that such
option must have an exercise price of at least 110% of the fair market value of
the shares of Common Stock, issuable upon exercise of the option (determined as
of the date the option is granted) and may not have an exercise term of more
than five years from the date the option is granted. Incentive stock options are
also subject to the further restriction that the aggregate fair market value
(determined as of the date of grant) of Common Stock as to which any such
incentive stock option first becomes exercisable in any calendar year is limited
to $100,000 per recipient. To the extent options covering more than $100,000
worth of Common Stock first become exercisable in any one calendar year, the
excess will be nonstatutory options. For purposes of determining which, if any,
options have been granted in excess of the $100,000 limit, options will be
considered to become exercisable in the order granted.

Each key senior officer, key officer and key employee eligible to
participate in the Incentive Stock Option Plan will be notified by the
Committee. To receive an award under the Incentive Stock Option Plan, an award
agreement must be executed which specifies the type of award to be granted, the
number of shares of Common Stock to which the award relates, the terms and
conditions of the award and the date granted. In the case of an award of
options, the award agreement will also specify the price at which the shares of
Common Stock subject to the option may be purchased and the date(s) on which the
option becomes exercisable.

The full exercise price for all shares of Common Stock purchased upon
the exercise of options granted under the Incentive Stock Option Plan must be
paid by cash or by personal check. Incentive stock options granted to employees
under the Incentive Stock Option Plan may remain outstanding and exercisable for
10 years from the date of grant or until the expiration of 90 days (or such
lesser period as the Committee may determine) from the date on which the person
to whom they were granted ceases to be employed by the Company. The Board of
Directors, upon recommendation of the Committee, shall determine whether options
granted under the Incentive Stock Option Plan are exercisable at any time during
the term or in cumulative or non-cumulative installments during the term.

Amendment and Termination. The Incentive Stock Option Plan expires ten
years after its adoption, unless sooner terminated by the Board of Directors.
The Board of Directors has authority to amend the Incentive Stock Option Plan in
such manner as it deems advisable. The Incentive Stock Option Plan provides for
appropriate adjustment, as determined by the Committee, in the number and kind
of shares subject to unexercised options in the event of any change in the
outstanding shares of Common Stock by reason of a stock split, stock dividend,
combination or reclassification of shares, recapitalization, merger or similar
event.

Individual Grants. The Committee has approved awards of 6,000 incentive
stock options and 3,000 incentive stock options to H. N. Padget, Jr. and W.
David Sweatt, respectively, that are exercisable only if and when the Bank is
successfully opened. Additionally, the Committee has approved additional awards
of 24,000 incentive stock options and 8,000 incentive stock options to Mr.
Padget and Mr. Sweatt, respectively, subject to achieving certain performance
targets established by the Board of Directors.

21
<PAGE> 27

NON QUALIFIED STOCK OPTION PLAN

General. The Company's Board of Directors and initial shareholders have
adopted the Non Qualified Stock Option Plan to attract, retain and compensate
key personnel and directors of the Company and the Bank through the grant of
options.

Administration. The Non Qualified Stock Option Plan will be
administered by the Board of Directors of the Company. The Board of Directors
will have the authority to select the key employees or directors of the Company
and the Bank to whom awards may be granted, to determine the terms of each
award, to interpret the provisions of the Non Qualified Stock Option Plan and to
make all other determinations that it may deem necessary or advisable for the
administration of the Non Qualified Stock Option Plan.

The Non Qualified Stock Option Plan provides for the grant of options
to purchase shares of Common Stock. The Board of Directors has reserved 40,000
shares of Common Stock for issuance under the Non Qualified Stock Option Plan.
In general, if any award granted under the Non Qualified Stock Option Plan
expires, terminates, is forfeited or is canceled for any reason, the shares of
Common Stock allocable to such award may again be made subject to an award
granted under the Non Qualified Stock Option Plan.

Awards. Directors and key employees of the Company are eligible to
receive grants under the Non Qualified Stock Option Plan. Awards may be granted
subject to a vesting requirement. The exercise price of the stock options will
be determined in each case by the Board.

Each director and key employee eligible to participate in the Non
Qualified Stock Option Plan will be notified by the Board of Directors. To
receive an award under the Non Qualified Stock Option Plan, an award agreement
must be executed which specifies the type of award to be granted, the number of
shares of Common Stock to which the award relates, the terms and conditions of
the award, the date granted, the price at which the shares of Common Stock
subject to the option may be purchased and the date(s) on which the option
becomes exercisable. The Board may, in its discretion, include in any option
granted a condition that the director or key employee agrees to remain in the
employ of and render services to the Company or the Bank for a period of time
specified in the agreement.

The full exercise price for all shares of Common Stock purchased upon
the exercise of options granted under the Non Qualified Stock Option Plan must
be paid in cash at the time of exercise. Options granted to employees or
directors under the Non Qualified Stock Option Plan may remain outstanding and
exercisable for ten years from the date of grant or such lesser period as the
Board of Directors may determine The Board may provide in any stock option
agreement that if a participant ceases to be employed by the Company or the
Bank, his unexercised options shall immediately terminate and will be of no
further force or effect.

Amendment and Termination. The Non Qualified Stock Option Plan expires
ten years after its adoption, unless sooner terminated by the Board of
Directors. The Board of Directors has authority to amend the Non Qualified Stock
Option Plan in such manner as it deems advisable. The Non Qualified Stock Option
Plan provides for appropriate adjustment, as determined by the Board of
Directors, in the number and kind of shares subject to unexercised options, in
the event of any change in the outstanding shares of Common Stock by reason of a
stock split, stock dividend, combination or reclassification of shares,
recapitalization, merger or similar event.

22
<PAGE> 28

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

It is possible that the Company and the Bank will have banking and
other business transactions in the ordinary course of business with directors
and officers of the Company and the Bank, including members of their families or
corporations, partnerships or other organizations in which such directors and
officers have a controlling interest. Federal law regulates both the terms and
amounts of such loans. If such transactions occur, (i) they will be on
substantially the same terms (including price or interest rate and collateral)
as those prevailing at the time for comparable transactions with unrelated
parties, and any banking transactions will not be expected to involve more than
the normal risk of collectibility or present other unfavorable features to the
Company and the Bank, and (ii) they will be on terms no less favorable than
could be obtained from an unaffiliated third party and will be approved by a
majority of the directors, including a majority of the disinterested directors.

TSJ&A provides consulting services in connection with the formation of
the Bank, including formulating the initial business plan and feasibility
analysis and orchestrating the regulatory process to seek approval of the Bank's
charter and federal deposit insurance. TSJ&A will be compensated with a total
consulting fee of $40,000, plus out-of-pocket expenses. Mary E. Johnson is
married to T. Stephen Johnson, President and sole shareholder of TSJ&A. Ms.
Johnson serves as the Controller of TSJ&A. Darrell Sumner is the President and
co-founder of Bank Assets, Inc., which is principally owned by Mr. Johnson.

DESCRIPTION OF CAPITAL STOCK OF THE COMPANY

COMMON STOCK

The Company's Articles of Incorporation authorize the Company to issue
up to 10,000,000 shares of Common Stock, par value $1.00 per share, of which
900,000 shares will be issued pursuant to the Offering. As of _________, 1998,
200,000 shares of Common Stock were issued and outstanding and held by 13
shareholders of record. As of ____________, 1998, 60,000 shares of Common Stock
were reserved for issuance upon the exercise of outstanding stock options under
the Incentive Stock Option Plan, 40,000 shares of Common Stock were reserved for
issuance upon the exercise of outstanding stock options under the Non Qualified
Stock Option Plan and 200,000 shares of Common Stock were reserved for issuance
upon the exercise of the Warrants.

All shares of Common Stock will be entitled to share equally in
dividends from funds legally available therefor, when, as and if declared by the
Board of Directors, and upon liquidation or dissolution of the Company, whether
voluntary or involuntary, to share equally in all assets of the Company
available for distribution to the shareholders. It is not anticipated that the
Company will pay any cash dividends on the Common Stock in the near future. See
"Dividends." Each holder of Common Stock will be entitled to one vote for each
share on all matters submitted to the shareholders. Holders of Common Stock will
not have any preemptive right to acquire authorized but unissued capital stock
of the Company. There is no cumulative voting, redemption right, sinking fund
provision or right of conversion in existence with respect to the Common Stock.
All shares of the Common Stock issued in accordance with the terms of the
Offering as described in this Prospectus will be fully-paid and non-assessable.
Exercise by the Organizers of any of their Warrants will cause dilution of the
percentage of ownership of other owners of Common Stock.

PREFERRED STOCK

The Company's Articles of Incorporation also authorize the Board of
Directors to issue up to 10,000,000 shares of preferred stock, no par value (the
"Preferred Stock"). The Board of Directors has the authority to determine the
designation, powers, preferences and relative rights of the Preferred Stock.
Preferred Stock may have voting rights, subject to applicable law and
determination by the Board of Directors. As of the date of the Offering, no
Preferred Stock has been issued. Although the Company has no present plans to
issue any Preferred Stock, the ownership and control of the Company by the
holders of the Common Stock would be diluted if the Company were to issue
Preferred Stock that had voting rights.

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CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND BYLAWS

Shareholders' rights and related matters are governed by the Georgia
Business Corporation Code (the "GBCC") and the Company's Articles of
Incorporation and Bylaws. The Company's Articles of Incorporation and Bylaws
contain several provisions, which are summarized below, that may have an
"anti-takeover" effect in that they could prevent an acquisition of the Company
unless a potential acquiror has obtained the prior approval of the Board of
Directors of the Company. The anti-takeover provisions may make it more
difficult for a potential acquiror to obtain control of the Company by means of
replacing the existing members of the Board of Directors and management of the
Company. These provisions may also make it more difficult for the Company's
shareholders to replace the Board of Directors or management, which may tend to
perpetuate the incumbent Board and management.

Preferred Stock. The existence of Preferred Stock may impede the
takeover of the Company without the approval of the Company's Board of Directors
by enabling the Company's Board of Directors to issue shares to persons friendly
to current management, which could render more difficult or discourage any
attempt to gain control of the Company through a proxy contest, tender offer,
merger or otherwise. In addition, the issuance of shares of Preferred Stock with
voting rights may have an adverse effect on the rights of the holders of Common
Stock, and in certain circumstances, such issuances of Preferred Stock could
decrease the market price of the Common Stock.

Staggered Terms for Board of Directors. Article IX of the Articles of
Incorporation provides that the Board of Directors of the Company will be
divided into three classes and that the directors in each class will serve for
staggered terms of three years each. This means that unless the existing
directors were to resign (which may be the result in a friendly acquisition of
the Company), it would take at least two annual meetings of the Company's
shareholders to replace a majority of its directors.

Under Georgia law, directors are elected annually for a term of one
year unless the articles of incorporation provide otherwise.

Change in Number of Directors. Section 12.1 of the Bylaws of the
Company provides that any bylaw may be amended or repealed, including bylaws
relating to the number of directors of the Company, and new bylaws adopted by
the Board of Directors or by the affirmative vote of the holders of at least 2/3
of the issued and outstanding shares of Common Stock.

Under Georgia law, the number of directors may be increased or
decreased from time to time by amendment to the Bylaws, unless the articles of
incorporation provide otherwise or unless the number of directors is otherwise
fixed by the shareholders.

Removal of Directors. Article X of the Articles of Incorporation of the
Company provides that one or more directors of the Company may be removed for
cause during their terms by the affirmative vote of the holders of a majority of
the issued and outstanding shares of each class of capital stock of the Company
then entitled to vote on such matters, as a class, and of the total shares
entitled to vote thereon. Article X also provides that directors of the Company
may be removed during their terms without cause by the affirmative vote of the
holders of 2/3 of the issued and outstanding shares of each class of capital
stock of the Company then entitled to vote on such matters, as a class, and of
the total shares entitled to vote thereon.

Under Georgia law, one or more directors of a corporation may be
removed with or without cause by the affirmative vote of a majority of the
shares present at a meeting at which a quorum is represented and entitled to
vote thereon, unless the articles of incorporation or a bylaw adopted by the
shareholders provides otherwise.

Special Shareholders' Meetings. Section 2.3 of the Bylaws of the
Company allows the President, the Board of Directors or shareholders holding not
less than 2/3 of the outstanding shares of the Company entitled to vote in an
election of directors to call a special meeting of the shareholders.

Under Georgia law, special meetings of shareholders may be called by
the Board of Directors, persons authorized to call such meetings by the articles
of incorporation or bylaws of the corporation or the holders of at

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least 25 percent, or such greater or lesser percentage as may be provided in the
articles of incorporation or bylaws, of all the votes entitled to be cast on any
issue proposed to be considered at the proposed special meeting.

Supermajority Voting on Certain Transactions. Under Article VIII of the
Articles of Incorporation of the Company, any disposition of all or
substantially all of its assets will require the affirmative vote of the holders
of at least 2/3 of the issued and outstanding shares of each class of capital
stock of the Company then entitled to vote on such matters, as a class, and of
the total shares entitled to vote thereon. However, if the Board of Directors of
the Company has approved the particular transaction by the affirmative vote of a
majority of the entire Board, then shareholder approval of the transaction would
require the affirmative vote of the holders of only a majority of the
outstanding shares of each class of capital stock of the Company then entitled
to vote on such matters, as a class, and of the total shares entitled to vote
thereon.

The foregoing provision could enable a minority of the Company
shareholders to prevent a transaction favored by the majority of the
shareholders. Also, in some circumstances, the directors could cause a 2/3 vote
to be required to approve the transaction by withholding their consent to such a
transaction, thereby entrenching their positions with the Company and the Bank.
However, of the thirteen persons who are directors of the Company, only one will
be affiliated with the Company and the Bank in a full-time management position.

Constituency Considerations. As permitted by O.C.G.A. ss. 14-2-202(b),
the Company's Articles of Incorporation permit the Board of Directors, in
evaluating an acquisition proposal, to consider the effects of the reputation
and business practices of the offeror and its management and affiliates upon the
Company and its subsidiaries and its employees, depositors and customers, as
well as the communities which they serve, and the future value of the Common
Stock in connection with determining the best interests of the Company and its
shareholders. The Articles of Incorporation also allow the Board of Directors,
when evaluating an acquisition proposal, to consider matters such as offering
price, the value of the securities offered in any exchange and any other matters
deemed pertinent by the Board of Directors when considering whether to oppose
such an offer.

Fair Price and Business Combination Statutes. Article IX of the
Company's Bylaws provides that the provisions of the GBCC's Fair Price Statute
(O.C.G.A. ss.ss. 14-2-1110 to 14-2-1113) and Business Combination Statute
(O.C.G.A. ss.ss. 14-2-1131 to 14-2-1133), both of which provide certain
anti-takeover protections, shall apply to the Company. The Fair Price provisions
are designed to protect shareholders against the inequities of certain tactics
which have been utilized in hostile takeover attempts. The Business Combination
Statute prohibits any person who acquires 10% or more of the voting stock of the
Company from thereafter engaging in any business combination with the Company
for a period of 5 years unless such person obtains approval from the Company's
Board of Directors or 90% of the remaining shareholders or acquires all the
remaining shares in the same transaction.

Amendment of Certain Provisions. Any amendment of Articles IX, X, XI,
XIV, XVII and XX of the Company's Articles of Incorporation requires the
affirmative vote of the holders of at least 2/3 of the outstanding shares of
Common Stock, unless 2/3 of the entire Board of Directors approve the amendment.
If 2/3 of the Board approve the amendment, the approval of only a majority of
the outstanding shares of capital stock entitled to be cast at the meeting
called for that purpose, voting together as a single class, shall be required to
approve such action.

INDEMNIFICATION AND LIMITATION OF LIABILITY OF DIRECTORS

Indemnification. Article XIII of the Bylaws of the Company contains
certain indemnification provisions which provide that directors, officers,
employees or agents of the Company will be indemnified against expenses actually
and reasonably incurred by them if they are successful on the merits of a claim
or proceeding.

When a case or dispute is not ultimately determined on its merits
(i.e., it is settled), the indemnification provisions provide that the Company
will indemnify directors when they meet the applicable standard of conduct. The
applicable standard of conduct is met if the director conducted himself in good
faith and acted in a manner he reasonably believed to be in or not opposed to
the best interests of the Company and, with respect to any criminal action or
proceeding, if the director had no reasonable cause to believe his conduct was
unlawful. Whether the applicable standard of conduct has been met is determined
by the Board of Directors, the shareholders or independent legal counsel in each
specific case. The Company may not, however, indemnify a director for liability

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arising out of circumstances which constitute exceptions to limitation of a
director's liability for monetary damages. See "--Limitation of Liability"
below.

The indemnification provisions of the Bylaws specifically provide that
the Company may purchase and maintain insurance on behalf of any director,
officer, employee or agent against any liability asserted against such person
and incurred by him in any such capacity, whether or not the Company would have
had the power to indemnify against such liability.

The Company is not aware of any pending or threatened action, suit or
proceeding involving any of its directors or officers for which indemnification
from the Company may be sought. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission (the "Commission") such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

Limitation of Liability. Article XVII of the Company's Articles of
Incorporation, subject to certain exceptions, eliminates the potential personal
liability of a director for monetary damages to the Company and to the
shareholders of the Company for breach of a duty as a director. There is no
elimination of liability for a breach of duty involving (i) appropriation of a
business opportunity of the Company, (ii) an act or omission involving
intentional misconduct or a knowing violation of law, (iii) a transaction from
which the director derives an improper material tangible personal benefit or
(iv) any payment of a dividend or approval of a stock repurchase that is illegal
under the Georgia Business Corporation Code. Article XVII does not eliminate or
limit the right of the Company or its shareholders to seek injunctive or other
equitable relief not involving monetary damages.

Article XVII was adopted by the Company pursuant to the Georgia
Business Corporation Code which allows Georgia corporations, with the approval
of their shareholders, to include in their articles of incorporation a provision
eliminating or limiting the liability of directors, except in the circumstances
described above. Article XVII was included in the Company's Articles of
Incorporation to encourage qualified individuals to serve and remain as
directors of the Company. Article XVII was also included to enhance the
Company's ability to secure liability insurance for its directors at a
reasonable cost. The Company intends to obtain liability insurance covering
actions taken by its directors in their capacities as directors. The Board of
Directors believes that Article XVII will enable the Company to secure such
insurance on terms more favorable than if such a provision were not included in
the Articles of Incorporation.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have 1,100,000 shares
of Common Stock outstanding. The 900,000 shares sold in the Offering (1,035,000
shares if the Underwriter's over-allotment option is exercised in full) will be
freely tradable by persons other than affiliates of the Company, without
restriction. Of this amount, shares which will be beneficially owned by persons
who are affiliates of the Company will be, commencing 90 days after the date of
this Prospectus, eligible for public sale pursuant to Rule 144, subject to the
volume restrictions discussed below. The remaining 200,000 shares of Common
Stock will be "restricted" securities within the meaning of Rule 144 under the
Securities Act and may not be sold in the absence of registration under the
Securities Act unless an exemption from registration is available, including
exemptions contained in Rule 144. The Company and all current shareholders of
the Company, however, have agreed not to sell or otherwise dispose of any shares
of Common Stock for a period of 180 days after the date of this Prospectus
without the prior written consent of the Underwriter, except that the Company
may issue shares of Common Stock in connection with acquisitions or upon the
exercise of options granted under the Option Plans. See "Underwriting."

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In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned his shares of Common
Stock for at least one year (including the prior holding period of any prior
owner other than an affiliate) is entitled to sell within any three-month period
that number of shares which does not exceed the greater of 1% of the outstanding
shares of Common Stock and the average weekly trading volume during the four
calendar weeks preceding each such sale. Sales under Rule 144 are also subject
to certain manner of sale provisions, notice requirements and the availability
of current public information about the Company. A person (or persons whose
shares are aggregated) who is not deemed an "affiliate" of the Company for at
least three months and who has beneficially owned shares for at least two years
(including the holding period of any prior owner other than an affiliate) would
be entitled to sell such shares under Rule 144 without regard to the limitations
described above. Rule 144 defines "affiliate" of a company as a person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such company. Affiliates of a
company generally include its directors, officers and principal shareholders.

The Company intends to grant under the Option Plans options to purchase
up to an aggregate of 100,000 shares of Common Stock. The Company intends to
register the shares issuable upon exercise of options granted under the Option
Plans. Upon such registration, such shares will be eligible for resale in the
public market without restrictions by persons who are not affiliates of the
Company, and to the extent they are held by affiliates, pursuant to Rule 144
without observance of the holding period requirements.

Prior to the Offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that the sale of
shares or the availability of shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales of substantial amounts of
Common Stock in the public market could adversely affect prevailing market
prices and the ability of the Company to raise equity capital in the future.

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to the Underwriter, and the
Underwriter has agreed to purchase, an aggregate of 900,000 shares of Common
Stock.

The Underwriting Agreement provides that the obligations of the
Underwriter thereunder are subject to approval of certain legal matters by its
counsel and to various other conditions. The Underwriter is obligated to
purchase all of the shares of the Common Stock offered hereby, excluding shares
covered by the over-allotment option granted to the Underwriter, if any such
shares are purchased.

The Company has been advised that the Underwriter proposes to offer the
Common Stock to the public at the initial public offering price set forth on the
cover page of this Prospectus, less a concession of not in excess of $_______
per share. The public offering price and concessions may be changed by the
Underwriter after the initial public offering.

The Company has granted to the Underwriter an option, exercisable
within 30 days after the date of the initial public offering, to purchase up to
an additional 135,000 shares of Common Stock to cover over-allotments, at the
same price per share to be paid by the Underwriter for the other shares offered
hereby. The Underwriter may purchase such shares only to cover over-allotments,
if any, in connection with the Offering.

The Company and the Underwriter have agreed to indemnify, or to
contribute to payments made by, each other against certain civil liabilities,
including certain civil liabilities under the Securities Act.

Before the Offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock was determined by
negotiation between the Company and the Underwriter. The factors considered in
determining the initial public offering price include the amount of start-up
capital needed, the history of and prospects for the business in which the
Company operates, proposed operations, projected revenues and earnings of the
Company and the trend of such earnings, the prospects for such earnings, the
general condition of the securities markets at the time of the Offering and the
demand for similar securities of reasonably comparable companies. There can be
no assurance, however, that the price at which the Common Stock will sell in the
public market after the Offering will not be lower than the price at which it is
being sold by the Underwriter. The

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Underwriter has agreed to undertake to sell the Common Stock in such a manner as
to ensure that the distribution standards of NASDAQ will be met. See "Risk
Factors--No Prior Public Market; Offering Price Arbitrarily Determined."

The Underwriter has informed the Company that it does not intend to
make sales to any accounts over which it exercises discretionary authority.

The Company and the Organizers have agreed not to sell, contract to
sell or otherwise dispose of any shares of the Common Stock for a period of 180
days after the date of this Prospectus without the prior written consent of the
Underwriter. See "Shares Eligible for Future Sale."

In connection with the Offering, the Underwriter may purchase and sell
the Common Stock in the open market, which transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created by the Underwriter in connection with the Offering.
Stabilizing transactions consist of certain bids or purchases for the purpose of
preventing or retarding a decline in the market price of the Common Stock, and
syndicate short positions involve the sale by the Underwriter of a greater
number of shares of Common Stock than they are required to purchase from the
Company in the Offering. The Underwriter also may impose a penalty bid, whereby
selling concessions allowed to syndicate members or other broker-dealers in
respect of the securities sold in the Offering for their account may be
reclaimed by the syndicate if such securities are repurchased by the syndicate
in stabilizing or covering transactions. These activities may stabilize,
maintain or otherwise affect the market price of the Common Stock, which may be
higher than the price that might otherwise prevail in the open market, and these
activities, if commenced, may be discontinued at any time. These transactions
may be effected on the Nasdaq SmallCap Market or otherwise.

At the request of the Company, shares of Common Stock have been
reserved for sale in the Offering to certain individuals, including directors
and employees of the Company, members of their families and other persons having
business relationships with the Company. The price of such shares to such
persons will be the initial public offering price set forth on the cover of this
Prospectus. The number of shares of Common Stock available for sale to the
general public will be reduced to the extent any of such persons purchase such
reserved shares. Any reserved shares not so purchased will be offered by the
Underwriter to the general public on the same basis as the other shares of
Common Stock offered hereby.

SUPERVISION AND REGULATION

The Company and the Bank are subject to state and federal banking laws
and regulations which impose specific requirements or restrictions and provide
for general regulatory oversight with respect to virtually all aspects of
operations. These laws and regulations are generally intended to protect
depositors, not stockholders. To the extent that the following summary describes
statutory or regulatory provisions, it is qualified in its entirety by reference
to the particular statutory and regulatory provisions. Any change in applicable
laws or regulations may have a material effect on the business and prospects of
the Company. Beginning with the enactment of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 ("FIRREA") and following with the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), numerous
additional regulatory requirements have been placed on the banking industry in
the past five years, and additional changes have been proposed. The operations
of the Company and the Bank may be affected by legislative changes and the
policies of various regulatory authorities. The Company is unable to predict the
nature or the extent of the effect on its business and earnings that fiscal or
monetary policies, economic control or new federal or state legislation may have
in the future.

BANK HOLDING COMPANY REGULATION

The Company will be a bank holding company within the meaning of the
BHCA and the Georgia BHC Act and will be regulated under such acts by the
Federal Reserve and the Department of Banking, respectively.

Under the BHCA and the Georgia BHC Act, the Company is subject to
periodic examination by the Federal Reserve and the Department of Banking and is
required to file periodic reports of its operations and such additional
information as the Federal Reserve and the Department of Banking may require.
The Company's and the Bank's activities are limited to banking, managing or
controlling banks, furnishing services to or performing services for its

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subsidiaries, or engaging in any other activity that the Federal Reserve
determines to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto.

Investments, Control and Activities. With certain limited exceptions,
the BHCA requires every bank holding company to obtain the prior approval of the
Federal Reserve before (i) acquiring substantially all the assets of any bank,
(ii) acquiring direct or indirect ownership or control of any voting shares of
any bank if after such acquisition it would own or control more than 5% of the
voting shares of such bank (unless it already owns or controls the majority of
such shares) or (iii) merging or consolidating with another bank holding
company. Acquisition of any additional banks would also require prior approval
from the Department of Banking.

In addition, and subject to certain exceptions, the BHCA and the Change
in Bank Control Act, together with regulations thereunder, require Federal
Reserve approval (or, depending on the circumstances, no notice of disapproval)
prior to any person or company acquiring "control" of a bank holding company,
such as the Company. Control is conclusively presumed to exist if an individual
or company acquires 25% or more of any class of voting securities of the bank
holding company.

Under the BHCA, the Company is generally prohibited from engaging in, or
acquiring direct or indirect control of more than 5% of the voting shares of any
company engaged in nonbanking activities, unless the Federal Reserve, by order
or regulation, has found those activities to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto. Some of the
activities that the Federal Reserve has determined by regulation to be proper
incidents to the business of banking include making or servicing loans and
certain types of leases, engaging in certain insurance and discount brokerage
activities, performing certain data processing services, acting in certain
circumstances as a fiduciary or investment or financial advisor, owning savings
associations, and making investments in certain corporations or projects
designed primarily to promote community welfare.

Source of Strength; Cross-Guarantee. In accordance with Federal Reserve
policy, the Company is expected to act as a source of financial strength to the
Bank and to commit resources to support the Bank in circumstances in which the
Company might not otherwise do so. Under the BHCA, the Federal Reserve may
require a bank holding company to suspend the payment of dividends, terminate
any activity, or relinquish control of a nonbank subsidiary (other than a
nonbank subsidiary of a bank) upon the Federal Reserve's determination that
there exists a serious risk to the financial soundness or stability of any
subsidiary depository institution of the bank holding company. Further, federal
bank regulatory authorities have additional discretion to require a bank holding
company to divest itself of any bank or nonbank subsidiary if the agency
determines that divestiture may aid the depository institution's financial
condition. The Bank may be required to indemnify, or cross-guarantee, the FDIC
against losses it incurs with respect to any other bank controlled by the
Company, which in effect makes the Company's assets available to the FDIC to
assist any failing or failed bank subsidiary of the Company.

The Georgia Code. All Georgia bank holding companies must register with
the Department of Banking under the Financial Institutions Code of Georgia (the
"Georgia Code"). A registered bank holding company must provide the Department
of Banking with information with respect to the financial conditions,
operations, management and inter-company relationships of the holding company
and its subsidiaries. The Department of Banking may also require such other
information as is necessary to keep itself informed about whether the provisions
of Georgia law and the regulations and orders issued thereunder by the
Department of Banking have been complied with, and the Department of Banking may
make examinations of any bank holding company and its subsidiaries.

Glass-Steagall Act. The Company will also be restricted in its
activities by the provisions of the Glass-Steagall Act, which will generally
limit the ability of the Company to own subsidiaries that are engaged
principally in the issue, flotation, underwriting, public sale, or distribution
of securities. The interpretation, scope and application of the provisions of
the Glass-Steagall Act currently are being considered and reviewed by regulators
and legislators and may be subject to significant revision as a result.

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THE BANK

General. The Company will initially have one subsidiary bank. The Bank
will be a national banking association and member of the Federal Reserve System.
The OCC is the primary regulator for the Bank. The OCC regulates or monitors all
areas of the Bank's operations, including security devices and procedures,
adequacy of capitalization and loss reserves, loans, investments, borrowings,
deposits, mergers, issuances of securities, payment of dividends, interest rates
payable on deposits, interest rates or fees chargeable on loans, establishment
of branches, corporate reorganizations, maintenance of books and records and
adequacy of staff training to carry on safe lending and deposit gathering
practices. The Bank must maintain certain capital ratios and is subject to
limitations on aggregate investments in real estate, bank premises, and
furniture and fixtures.

Under FDICIA, all insured institutions must undergo regular on-site
examination by their appropriate banking agency. The cost of examinations of
insured depository institutions and any affiliates may be assessed by the
appropriate agency against each institution or affiliate as it deems necessary
or appropriate. Insured institutions are required to submit annual reports to
the FDIC and the appropriate agency (and state supervisor when applicable).
FDICIA also directs the FDIC to develop with other appropriate agencies a method
for insured depository institutions to provide supplemental disclosure of the
estimated fair market value of assets and liabilities, to the extent feasible
and practicable, in any balance sheet, financial statement, report of condition
or any other report of any insured depository institution. FDICIA also requires
the federal banking regulatory agencies to prescribe, by regulation, standards
for all insured depository institutions and depository institution holding
companies relating, among other things, to: (i) internal controls, information
systems and audit systems; (ii) loan documentation; (iii) credit underwriting;
(iv) interest rate risk exposure; and (v) asset quality.

Transactions with Affiliates and Insiders. The Bank is subject to the
provisions of Section 23A of the Federal Reserve Act, which place limits on the
amount of loans or extensions of credit to, or investments in, or certain other
transactions with, affiliates and on the amount of advances to third parties
collateralized by the securities or obligations of affiliates. In addition, most
of these loans and certain other transactions must be secured in prescribed
amounts. The Bank is also subject to the provisions of Section 23B of the
Federal Reserve Act that, among other things, prohibit an institution from
engaging in certain transactions with certain affiliates unless the transactions
are on terms substantially the same, or at least as favorable to such
institution or its subsidiaries, as those prevailing at the time for comparable
transactions with non-affiliated companies. The Bank is subject to certain
restrictions on extensions of credit to executive officers, directors, certain
principal stockholders and their related interests. Such extensions of credit
(i) must be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
third parties and (ii) must not involve more than the normal risk of repayment
or present other unfavorable features.

Branching and Geographic Expansion. Georgia law presently
permits the establishment of branches by a state or national bank located in
Georgia with certain limitations. Banks in the State of Georgia may establish
branches in any three additional counties. After July 1, 1998, banks may
establish branches in any county in Georgia. Under the Georgia Code, it is
unlawful without the prior approval of the Department of Banking (i) for any
bank holding company to acquire direct or indirect ownership or control of more
than five percent of the voting shares of any bank, (ii) for any bank holding
company or subsidiary thereof, other than a bank, to acquire all or
substantially all of the assets of a bank, or (iii) for any bank holding company
to merge or consolidate with any other bank holding company. It is also unlawful
for any bank holding company to acquire direct or indirect ownership or control
of more than five percent of the voting shares of any bank unless such bank has
been in existence and continuously operating or incorporated as a bank for a
period of five years or more prior to the date of application to the Department
of Banking for approval of such acquisition. In addition, in any such
acquisition by an existing bank holding company, the initial banking subsidiary
of such bank holding company must have been incorporated for not less than two
years before the holding company can acquire another bank.

The BHCA, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branch Efficiency Act of 1994 (the
"Interstate Banking Act"), which became effective on September 29, 1995,
repealed the prior statutory restrictions on interstate acquisitions of banks by
bank holding companies, such that the Company and any other bank holding company
located in Georgia may now acquire a bank located in any other state, and any
bank holding company located outside Georgia may lawfully acquire any bank based
in another state, regardless of state law to the contrary, in either case
subject to certain deposit-percentage, aging requirements and

30
<PAGE> 36

other restrictions. The Interstate Banking Act also generally provides that
after June 1, 1997, national and state-chartered banks may branch interstate
through acquisitions of banks in other states. By adopting legislation prior to
that date, a state has the ability either to "opt in" and accelerate the date
after which interstate branching is permissible or "opt out" and prohibit
interstate branching altogether. In March 1996, the Georgia legislature adopted
legislation opting into interstate branching. As a result of these provisions,
banking organizations in other states, most significantly North Carolina,
Florida and Alabama, have entered the Georgia market through acquisitions of
Georgia institutions. Those acquisitions are subject to federal and Georgia
approval as described above. The Georgia legislation also provides that an
out-of-state bank may not enter the State of Georgia through a de novo branch,
nor may it enter through the acquisition of less than substantially all of the
assets of an existing bank.

Community Reinvestment Act. The Community Reinvestment Act requires that
each insured depository institution shall be evaluated by its primary federal
regulator with respect to its record in meeting the credit needs of its local
community, including low and moderate income neighborhoods, consistent with the
safe and sound operation of those institutions. These factors are also
considered in evaluating mergers, acquisitions and applications to open a branch
or facility.

Other Regulations. Interest and certain other charges collected or
contracted for by the Bank are subject to state usury laws and certain federal
laws concerning interest rates. The Bank's loan operations are also subject to
certain federal laws applicable to credit transactions, such as the federal
Truth-In-Lending Act governing disclosures of credit terms to consumer
borrowers, the Home Mortgage Disclosure Act of 1975 requiring financial
institutions to provide information to enable the public and public officials to
determine whether a financial institution is fulfilling its obligation to help
meet the housing needs of the community it serves, the Equal Credit Opportunity
Act prohibiting discrimination on the basis of race, creed or other prohibited
factors in extending credit, the Fair Credit Reporting Act of 1978 governing the
use and provision of information to credit reporting agencies, the Fair Debt
Collection Act governing the manner in which consumer debts may be collected by
collection agencies and the rules and regulations of the various federal
agencies charged with the responsibility of implementing such federal laws. The
deposit operations of the Bank also are subject to the Right to Financial
Privacy Act, which imposes a duty to maintain confidentiality of consumer
financial records and prescribes procedures for complying with administrative
subpoenas of financial records, and the Electronic Funds Transfer Act and
Regulation E issued by the Federal Reserve to implement that act, which governs
automatic deposits to and withdrawals from deposit accounts and customers'
rights and liabilities arising from the use of automated teller machines and
other electronic banking services.

ENFORCEMENT POLICIES AND ACTIONS

FIRREA and subsequent federal legislation significantly increased the
enforcement authorities of the FDIC and other federal depository institution
regulators, and authorizes the imposition of civil money penalties up to $1
million per day. Persons who are affiliated with depository institutions can be
removed from any office held in such institution and banned for life from
participating in the affairs of any such institution. The banking regulators
have not hesitated to use the new enforcement authorities provided under FIRREA.
Furthermore, regulators have broad power to issue cease and desist orders that
may, among other things, require affirmative action to correct any harm
resulting from a violation or practice, including restitution, reimbursement,
indemnifications or guarantees against loss. A financial institution may also be
ordered to restrict its growth, dispose of certain assets, rescind agreements or
contracts or take other actions as determined by the ordering agency to be
appropriate.

DEPOSIT INSURANCE

The deposits of the Bank are currently insured to a maximum of $100,000
per depositor, subject to certain aggregation rules. The FDIC establishes rates
for the payment of premiums by federally insured banks and thrifts for deposit
insurance. Separate insurance funds (BIF, the Bank Insurance Fund, and SAIF, the
Savings Association Insurance Fund) are maintained for commercial banks and
thrifts, with insurance premiums from the industry used to offset losses from
insurance payouts when banks and thrifts fail. Due to the high rate of failures
in recent years, the FDIC has adopted a risk-based deposit insurance premium
system for all insured depository institutions, including the Bank, which
requires that a depository institution pay to BIF or SAIF from $.03 to $.27 per
$100 of insured deposits depending on its capital levels and risk profile, as
determined by its primary federal regulator on a

31
<PAGE> 37

semi-annual basis. The Bank anticipates that it will pay premiums at the lower
end of the range during its initial periods of operation.

DIVIDENDS

The principal source of the Company's cash revenues comes from dividends
received from the Bank. The amount of dividends that may be paid by the Bank to
the Company depends on the Bank's earnings and capital position and is limited
by federal and state law, regulations, and policies. In addition, the Board of
Governors of the Federal Reserve Bank has stated that bank holding companies
should refrain from or limit dividend increases or reduce or eliminate dividends
under circumstances in which the bank holding company fails to meet minimum
capital requirements or in which its earnings are impaired.

As a national bank, the Bank may not pay dividends from its
paid-in-capital. All dividends must be paid out of undivided profits then on
hand, after deducting expenses, including reserves for losses and bad debts. In
addition, a national bank is prohibited from declaring a dividend on its shares
of common stock until its surplus equals its stated capital, unless there has
been transferred to surplus no less than one-tenth of the bank's net profits of
the preceding two consecutive half-year periods (in the case of an annual
dividend). The approval of the OCC is required if the total of all dividends
declared by a national bank in any calendar year exceeds the total of its net
profits for that year combined with its retained net profits for the preceding
two years, less any required transfers to surplus.

Under FDICIA, the Bank may not pay a dividend if, after paying the
dividend, the Bank would be undercapitalized. See "-- Capital Regulations"
below.

CAPITAL REGULATIONS

The federal bank regulatory authorities have adopted risk-based capital
guidelines for banks and bank holding companies that are designed to make
regulatory capital requirements more sensitive to differences in risk profile
among banks and bank holding companies, account for off-balance sheet exposure,
and minimize disincentives for holding liquid assets. The resulting capital
ratios represent qualifying capital as a percentage of total risk-weighted
assets and off-balance sheet items. The guidelines are minimums, and the federal
regulators have noted that banks and bank holding companies contemplating
significant expansion programs should not allow expansion to diminish their
capital ratios and should maintain ratios well in excess of the minimums.

FDICIA established a capital-based regulatory plan designed to promote
early intervention for troubled banks and requires the FDIC to choose the least
expensive resolution of bank failures. The capital-based regulatory framework
contains five categories of compliance with regulatory capital requirements,
including "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized" and "critically undercapitalized." To qualify
as a "well capitalized" institution, a bank must have a leverage ratio of no
less than 5%, a Tier 1 risk-based ratio of no less than 6%, and a total
risk-based capital ratio of no less than 10%, and the bank must not be under any
order or directive from the appropriate regulatory agency to meet and maintain a
specific capital level.

The current guidelines require all bank holding companies and
federally-regulated banks to maintain a minimum risk-based total capital ratio
equal to 8%, of which at least 4% must be Tier 1 capital. Under the FDICIA
regulations, the applicable agency can treat an institution as if it were in the
next lower category if the agency determines (after notice and an opportunity
for hearing) that the institution is in an unsafe or unsound condition or is
engaging in an unsafe or unsound practice. The degree of regulatory scrutiny of
a financial institution will increase, and the permissible activities of the
institution will decrease, as it moves downward through the capital categories.
Institutions that fall into one of the three undercapitalized categories may be
required to (i) submit a capital restoration plan; (ii) raise additional
capital; (iii) restrict their growth, deposit interest rates, and other
activities; (iv) improve their management; (v) eliminate management fees; or
(vi) divest themselves of all or a part of their operations. Bank holding
companies controlling financial institutions can be called upon to boost the
institutions' capital and to partially guarantee the institutions' performance
under their capital restoration plans. Tier 1 capital includes stockholders'
equity, qualifying perpetual preferred stock and minority interests in equity
accounts of consolidated subsidiaries, but excludes goodwill and most other
intangible assets and excludes the allowance for loan and lease losses. Tier 2
capital includes the excess of any preferred stock not included in Tier 1
capital,

32
<PAGE> 38

mandatory convertible securities, hybrid capital instruments, subordinated debt
and intermediate-term preferred stock and general reserves for loan and lease
losses up to 1.25% of risk-weighted assets.

Under these guidelines, banks' and bank holding companies' assets are
given risk-weights of 0%, 20%, 50% or 100%. In addition, certain off-balance
sheet items are given credit conversion factors to convert them to asset
equivalent amounts to which an appropriate risk-weight will apply. These
computations result in the total risk-weighted assets. Most loans are assigned
to the 100% risk category, except for first mortgage loans fully secured by
residential property and, under certain circumstances, residential construction
loans, both of which carry a 50% rating. Most investment securities are assigned
to the 20% category, except for municipal or state revenue bonds, which have a
50% rating, and direct obligations of or obligations guaranteed by the United
States Treasury or United States Government agencies, which have a 0% rating.

The Federal Reserve has also implemented a leverage ratio, which is Tier
1 capital as a percentage of average total assets less intangible assets, to be
used as a supplement to the risk-based guidelines. The principal objective of
the leverage ratio is to place a constraint on the maximum degree to which a
bank holding company may leverage its equity capital base. The minimum required
leverage ratio for top-rated institutions is 3%, but most institutions are
required to maintain an additional cushion of at least 1-2 %.

<TABLE>
<CAPTION>
Tier 1 Risk- Total Risk-
Capital Category Tier 1 Capital Based Capital Based Capital Other
---------------- -------------- ------------- ------------- -----
<S> <C> <C> <C> <C>
Well Capitalized........................ 5% or more 6% or more 10% or more Not subject to a
capital directive

Adequately Capitalized.................. 4% or more 4% or more 8% or more --

Undercapitalized........................ less than 4% less than 4% less than 8% --

Significantly Undercapitalized.......... less than 3% less than 3% less than 6% --

Critically Undercapitalized............. 2% or less -- -- --
tangible equity
</TABLE>

These capital guidelines can affect the Bank and the Company in several
ways. While the Company will initially satisfy its leverage ratio requirements
and the Bank will be considered well-capitalized, rapid growth, poor loan
portfolio performance, or poor earnings performance, or a combination of these
factors, could change the Bank's and the Company's capital position in a
relatively short period of time, making an additional capital infusion
necessary.

FDICIA requires the federal banking regulators to revise the risk-based
capital standards to provide for explicit consideration of interest-rate risk,
concentration of credit risk, and the risks of non-traditional activities. It is
uncertain what effect these regulations, when implemented, would have on the
Company and the Bank.

RECENT AND FUTURE LEGISLATIVE DEVELOPMENTS

Revisions to the Bank Secrecy Act in 1996 affected numerous issues,
including suspicious activity reporting, funds transfer recording keeping,
interim exemption rules, and the definition of "exempt persons" and the way in
which banks designate exempt customers.

The Economic Growth and Regulatory Paperwork Reduction Act of 1996 was
enacted in September 1996. This Act primarily provided arrangements for the
recapitalization of the SAIF and regulatory relief for bank holding companies in
several significant areas. Bank holding companies that also owned savings
associations and were, therefore, subject to regulation by the Office of Thrift
Supervision ("OTS") as savings and loan holding companies, were relieved of such
duplicative regulation, and neither future acquisitions of savings associations
by bank holding companies nor mergers of savings associations into banks will
any longer require application to and approval by the OTS. Acquisitions by
well-capitalized and well managed bank holding companies of companies engaging
in

33
<PAGE> 39

permissible nonbanking activities (other than savings associations) may now
be made with only 12 days prior notice to the Federal Reserve, and de novo
engagement in such activities by such bank holding companies may be commenced
without prior notice and with only subsequent notice to the Federal Reserve. The
same legislation also gave regulatory relief to banks in regard to corporate
governance, branching, disclosure (under the Real Estate Settlement Procedures
Act and the Truth in Lending Act) and other operational areas.

The Federal Reserve also recently adopted regulations providing for a
streamlined application process in connection with acquisitions of banks and
bank holding companies by well-capitalized, well-managed bank holding companies.
During 1996, changes were also made to the current system used to rate banks.

On July 3, 1997, President Clinton signed legislation to clarify that
branches of state-chartered banks operating in host states are covered by the
law of their home chartering state. The Riegle-Neal Amendment Act of 1997 is
intended to preserve the dual banking system by having state banks come under
only the rules of their chartering states.

Other legislative and regulatory proposals regarding changes in banking
and the regulation of banks, thrifts and other financial institutions and bank
and bank holding company powers are being considered by the executive branch of
the Federal government, Congress and various state governments, including
Georgia. Among other items under consideration are the possible combination of
the BIF and SAIF, changes in or repeal of the Glass-Steagall Act which separates
commercial banking from investment banking, and changes in the BHCA to broaden
the powers of "financial services" companies to own and control depository
institutions and engage in activities not closely related to banking. Certain of
these proposals, if adopted, could significantly change the regulation of banks
and the financial services industry. It cannot be predicted whether any of these
proposals will be adopted, and, if adopted, how these proposals will affect the
Company and the Bank.

LEGAL PROCEEDINGS

The Company has received a letter from Milton National Bank ("Milton")
which threatens litigation in connection with H. N. Padget, Jr.'s resignation as
an officer of Milton and alleged misappropriation of Milton's trade secrets.
Based upon the advice of legal counsel, the Company believes such claims are
without merit and intends to vigorously defend itself in the event of
litigation.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Troutman Sanders LLP, Atlanta, Georgia. Waller
Lansden Dortch & Davis, PLLC is acting as counsel for the Underwriter in
connection with certain legal matters relating to the shares of Common Stock
offered hereby.

EXPERTS

The audited financial statements of the Company at December 31, 1997,
and for the period from November 5, 1997 (inception) until December 31, 1997,
set forth herein have been so included in reliance on the report of Bricker &
Melton, P.A., independent certified public accountants, given on the authority
of that firm as experts in accounting and auditing.

REPORTS TO SHAREHOLDERS

The Company is not a reporting company as defined by the Commission .
At any time that the Company is not a reporting company, the Company will
furnish its shareholders with annual reports containing audited financial
information for each fiscal year on or before the date of the annual meeting of
shareholders as required by Rule 80-6-1-.05 of the Department of Banking. The
Company's fiscal year ends on December 31. Additionally, the Company will also
furnish such other reports as it may determine to be appropriate or as otherwise
may be required by law.

Upon the effective date of the Registration Statement on Form SB-2
(herein, together with all amendments thereto, called the "Registration
Statement") with respect to the shares of Common Stock offered hereby, the

34
<PAGE> 40

Company will be subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended, which include requirements to file annual reports on
Form 10-KSB and quarterly reports on Form 10-QSB with the Commission. This
reporting obligation will exist for at least one year and will continue for
fiscal years thereafter, except that such reporting obligations may be suspended
for any subsequent fiscal year if at the beginning of such year the Common Stock
of the Company is held of record by less than 300 persons.

ADDITIONAL INFORMATION

The Company has filed with the Commission the Registration Statement
under the Securities Act, with respect to the shares of Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement. For further information with respect to the Company and
the Common Stock, reference is made to the Registration Statement and the
exhibits thereto. The Registration Statement may be examined and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the regional
offices of the Commission located at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of the Registration Statement may be
obtained at prescribed rates from the Public Reference Section of the
Commission, Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, DC
20549. The Commission also maintains a Web site (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding registrants, such as the Company, that file electronically with the
Commission.

The Company and the Organizers have filed or will file various
applications with the FDIC, the Federal Reserve, the Department of Banking and
the OCC. Such applications and the information they contain are not incorporated
herein. Prospective investors should rely only on information contained in this
Prospectus and in the Company's related Registration Statement in making an
investment decision. To the extent that other available information not
presented in this Prospectus, including information available from the Company
and information in public files and records maintained by the FDIC, the Federal
Reserve, the Department of Banking and the OCC, is inconsistent with information
presented in this Prospectus or provides additional information, such other
information is superseded by the information presented in this Prospectus and
should not be relied on. Projections appearing in the applications are based on
assumptions that the Organizers believe are reasonable, but as to which no
assurances can be made. The Company specifically disaffirms those projections
for purposes of this Prospectus and cautions prospective investors against
placing reliance on them for purposes of making an investment decision.

35
<PAGE> 41

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report....................................................................................F-2

Balance Sheet - December 31, 1997...............................................................................F-3

Statement of Operations for the Period from Inception (November 5, 1997)
to December 31, 1997.........................................................................................F-4

Statement of Changes in Stockholders' Equity for the Period from
Inception (November 5, 1997) to December 31, 1997............................................................F-5

Statement of Cash Flows for the Period from Inception (November 5, 1997)
to December 31, 1997.........................................................................................F-6

Notes to Financial Statements as of and for the period from Inception
(November 5, 1997) to December 31, 1997......................................................................F-7
</TABLE>

F-1

<PAGE> 42

INDEPENDENT AUDITORS' REPORT

The Board of Directors
CNB Holdings, Inc.
(A Development Stage Corporation)
Atlanta, Georgia

We have audited the accompanying balance sheet of CNB Holdings, Inc. (a
development stage corporation), as of December 31, 1997, and the related
statements of operations, changes in stockholders' equity and cash flows for the
period from inception (November 5, 1997) to December 31, 1997. These financial
statements are the responsibility of CNB Holdings, Inc.'s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CNB Holdings, Inc. as of
December 31, 1997, and the results of its operations, changes in stockholders'
equity and cash flows for the period from inception (November 5, 1997) to
December 31, 1997, in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that CNB
Holdings, Inc. will continue as a going concern. As discussed in Note 1 to the
financial statements, CNB Holdings, Inc. is in the organization stage and has
not commenced operations. Also, as discussed in Note 2, CNB Holdings, Inc.'s
future operations are dependent on obtaining capital through an initial stock
offering and obtaining the necessary final regulatory approvals to operate under
a national bank charter. These factors and the expense associated with the
development of a new banking institution raise substantial doubt about CNB
Holdings, Inc.'s ability to continue as a going concern. Management's plans in
regard to these matters are described in Note 2. The financial statements do not
include any adjustments relating to the recoverability of reported asset amounts
or the amount of liabilities that might result from the outcome of this
uncertainty.

February 27, 1998
Duluth, Georgia

F-2

<PAGE> 43

CNB HOLDINGS, INC.
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET

DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS

Current assets:
Cash $ 60,698
---------
Total current assets 60,698
---------

Fixed assets 60,947
Deferred organizational costs 47,400
Contribution receivable 25,000
Other assets 1,000
---------

TOTAL ASSETS $ 195,045
=========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Current liabilities:
Accounts payable $ 45,845
Note payable (Note 2) 57,479
---------
TOTAL LIABILITIES 103,324
---------
STOCKHOLDERS' EQUITY
Preferred stock, par value not stated; 10,000,000 shares authorized, no
shares issued and outstanding --
Common stock, par value $1.00 per share; 10,000,000 shares authorized, no
shares issued and outstanding --
Additional paid-in capital (Note 2) 120,000
Deficit accumulated during the development stage (28,279)
---------
TOTAL STOCKHOLDERS' EQUITY 91,721
---------

Commitments and contingencies (Note 4)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 195,045
=========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3

<PAGE> 44

CNB HOLDINGS, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF OPERATIONS

FOR THE PERIOD FROM INCEPTION (NOVEMBER 5, 1997) TO DECEMBER 31, 1997

<TABLE>
<S> <C>
INCOME
Interest income $ 736
--------
Total Income 736
--------

EXPENSES
Salaries and employee benefits 25,516
Other operating 3,499
--------
Total Expenses 29,015
--------

Income tax expense (benefit) (Note 3) --
--------

NET LOSS $ 28,279
========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4

<PAGE> 45

CNB HOLDINGS, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD FROM INCEPTION (NOVEMBER 5, 1997) TO DECEMBER 31, 1997

<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Paid-in Development
Stock Capital Stage Total
--------- ------------ ------------- ----------
<S> <C> <C> <C> <C>
Capital contributions (Note 2) $ -- $ 120,000 $ -- $ 120,000

Net Loss -- -- (28,279) (28,279)
--------- ---------- ---------- ----------

BALANCE AT DECEMBER 31, 1997 $ -- $ 120,000 $ (28,279) $ 91,721
========= ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5

<PAGE> 46

CNB HOLDINGS, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD FROM INCEPTION (NOVEMBER 5, 1997) TO DECEMBER 31, 1997

The accompanying notes are an integral part of these financial statements.

<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (28,279)
Adjustments to reconcile net loss to net cash used (provided) by operating
activities:
Increase in contribution receivable (25,000)
Increase in other assets (1,000)
Increase in accounts payable 45,845
---------
NET CASH USED BY OPERATING ACTIVITIES (8,434)
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets (60,947)
Deferred organization costs (47,400)
---------
NET CASH USED BY INVESTING ACTIVITIES (108,347)
---------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from capital contributions 120,000
Proceeds from note payable 57,479
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 177,479
---------

NET INCREASE IN CASH AND CASH EQUIVALENTS 60,698
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
--
---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 60,698
=========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE> 47

CNB HOLDINGS, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD FROM INCEPTION (NOVEMBER 5, 1997) TO DECEMBER 31, 1997

The accompanying notes are an integral part of these financial statements.

NOTE 1--ORGANIZATION

CNB Holdings, Inc. was formed to organize and own all of the capital stock of
Chattahoochee National Bank (the Bank); together they are herein referred to as
"the Company." The organizers of the Company filed an application to charter the
Bank as a national bank with the Office of the Comptroller of the Currency, with
the FDIC for deposit insurance and to conduct a commercial banking business from
Alpharetta, Georgia. Provided the necessary capital is raised and the necessary
regulatory approvals are received, it is expected that operations will commence
in the third quarter of 1998.

The accounting and reporting policies of the Company conform to generally
accepted accounting principles and to general practices within the banking
industry.

The Company plans to raise a minimum of $11,000,000 through two offerings of
its $1.00 par value common stock at a purchase price of $10.00 per share. The
organizers, directors and members of their immediate families expect to purchase
a total of 200,000 units, which consist of one share of common stock and one
warrant, at an aggregate purchase price of $2,000,000 in a private offering (see
Note 2). In recognition of the financial risks they have undertaken in
organizing the Company and its bank subsidiary, for each $10 purchase, each
organizer will receive a unit consisting of one share of common stock and one
warrant to purchase an additional share of common stock at $10 per share.

Upon the completion of the sale of common stock and the opening of the Bank,
incurred organizational costs, estimated to be $150,000 ($100,000 for the Bank
and $50,000 for the Company, consisting principally of legal, regulatory,
consulting and incorporation fees) will be deferred and amortized over the
Bank's and the Company's initial 60 months of operations. Offering expenses,
estimated to be $775,000, (consisting principally of direct incremental and
underwriting costs of the stock offering) will be deducted from the proceeds of
the offering, and pre-opening expenses, estimated to be $250,000, (consisting
principally of salaries, overhead and other operating costs) will be charged
against the initial period's operating results.

For purposes of reporting cash flows, cash and cash equivalents include cash
on hand and amounts due from banks.

NOTE 2--LIQUIDITY AND GOING CONCERN CONSIDERATIONS

The Company incurred a net loss of $28,279 for the period from inception
(November 5, 1997) to December 31, 1997. Operations through December 31, 1997,
relate primarily to expenditures for incorporating and organizing the Company.

At December 31, 1997, the Company had been totally funded by $120,000 in
capital contributions from the organizers. These capital contributions are
without interest, at risk of loss and are not guaranteed to be paid back to the
organizers.

The accompanying notes are an integral part of these financial statements.

F-7
<PAGE> 48

CNB HOLDINGS, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD FROM INCEPTION (NOVEMBER 5, 1997) TO DECEMBER 31, 1997

The accompanying notes are an integral part of these financial statements.

NOTE 2--LIQUIDITY AND GOING CONCERN CONSIDERATIONS, (Continued)

Management believes that the current level of expenditures is well within the
financial capabilities of the organizers and is adequate to meet existing
obligations and fund current operations, but commencing banking operations is
dependent upon the Company successfully completing the stock offering and
obtaining regulatory approval.

In addition to the organizer's private offering, the Company is currently
anticipating offering a minimum of 900,000 and a maximum of 1,035,000 shares of
its common stock, $1.00 par value, at $10 per share in an initial public
offering. Costs related to the organization and registration of the Company's
common stock will be paid from the gross proceeds of the offering. Should
subscriptions for the minimum private and initial offerings not be obtained,
amounts paid by organizers and subscribers with their subscriptions will be
returned, net of expenses, and the offer will be withdrawn. (See Note 1).

On December 24, 1997, the Company entered into a 60-month installment loan of
$57,478.75, payable at $975.00 per month until maturity on December 24, 2002.
This loan is secured by an automobile and bears an interest rate of 9.0 percent.

NOTE 3--INCOME TAXES

There was no provision (benefit) for income taxes for the period from
inception (November 5, 1997) to December 31, 1997, due to the Company's net
operating loss and its valuation reserve against deferred tax assets.

The following difference gives rise to deferred income taxes as of December
31, 1997:

<TABLE>
<S> <C>
Net operating loss carryforward $ 9,615
Valuation reserve (9,615)
--------
Net deferred tax asset $ --
========
</TABLE>

As of December 31, 1997, the Company has a net operating loss carryforward of
approximately $28,279.

NOTE 4--COMMITMENTS

The Company entered into a letter of employment with the President and Chief
Executive Officer of the Bank. The letter of employment continues for three
years and provides for an annual base salary of $125,000 per year with a 2 1/2
percent increase on the anniversary date of the opening of the Bank, plus an
annual medical insurance premium and such other benefits as hospitalization,
disability and life insurance, which are generally made available to other
senior executives of the Company and the Bank.

The accompanying notes are an integral part of these financial statements.

F-8

<PAGE> 49

================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY THE SHARES OF COMMON STOCK OFFERED HEREBY
BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.

------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary...................................
Risk Factors..............................
Organizers' Offering......................
Use of Proceeds...........................
Dilution..................................
Capitalization............................
Dividends.................................
Plan of Operations........................
Proposed Business of the Company and
the Bank................................
Management................................
Description of Capital Stock of the
Company..............................
Shares Eligible for Future Sale...........
Underwriting..............................
Supervision and Regulation................
Legal Proceedings.........................
Legal Matters.............................
Experts...................................
Reports to Shareholders...................
Additional Information....................
Index to Financial Statements............. F-1
</TABLE>

UNTIL , 1998 (FOR ___ DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT
IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING
AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

================================================================================

900,000 SHARES

CNB HOLDINGS, INC.

A PROPOSED BANK HOLDING COMPANY

FOR

CHATTAHOOCHEE
NATIONAL BANK

(IN ORGANIZATION)

COMMON STOCK

------------

PROSPECTUS

------------

J. C. BRADFORD & CO.

_________, 1998

================================================================================

<PAGE> 50

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Consistent with the pertinent provisions of the laws of Georgia, the
Registrant's Bylaws provide that the Registrant shall have the power to
indemnify its directors and officers against expenses (including attorneys'
fees) and liabilities arising from actual or threatened actions, suits or
proceedings, whether or not settled, to which they become subject by reason of
having served in such role if such director or officer acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Registrant and, with respect to a criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Advances against expenses
shall be made so long as the person seeking indemnification agrees to refund the
advances if it is ultimately determined that he is not entitled to
indemnification. A determination of whether indemnification of a director or
officer is proper because he met the applicable standard of conduct shall be
made (a) by the Board of Directors of the Registrant, (b) in certain
circumstances, by independent legal counsel in a written opinion or (c) by the
affirmative vote of a majority of the shares entitled to vote.

In addition, Article XVII of the Registrant's Articles of
Incorporation, subject to certain exceptions, eliminates the potential personal
liability of a director for monetary damages to the Registrant and to the
shareholders of the Registrant for breach of a duty as a director. There is no
elimination of liability for (a) a breach of duty involving appropriation of a
business opportunity of the Registrant, (b) an act or omission involving
intentional misconduct or a knowing violation of law, (c) a transaction from
which the director derives an improper personal benefit or (d) as to any payment
of a dividend or approval of a stock repurchase that is illegal under the
Georgia Business Corporation Code. The Articles of Incorporation do not
eliminate or limit the right of the Registrant or its shareholders to seek
injunctive or other equitable relief not involving monetary damages.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Estimated expenses, other than underwriting discounts and commissions,
of the sale of the Registrant's Common Stock, $1.00 par value, are as follows:

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee $3,053.25
National Association of Securities Dealers, Inc. Filing Fee*
Nasdaq Stock Market Listing Fees*
Blue Sky Fees and Expenses*
Legal Fees and Expenses*
Accounting Fees and Expenses*
Printing and Engraving Expenses*
Mail and Distribution*
Miscellaneous*

Total $
=========
</TABLE>

- ------------
* To be furnished by amendment.

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

On April __, 1998, the Registrant issued to the organizers of the
Registrant (13 persons) in a private placement exempt from registration under
Section 4(2) of and Rule 506 promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), an aggregate of 200,000 units, each consisting
of one share of Common Stock and one warrant to purchase one share of Common
Stock (a "Unit"), for an aggregate purchase price of $2,000,000.

II-1

<PAGE> 51

All of the Units were acquired by the organizers for investment
purposes and with no view toward the resale or distribution thereof. The offers
and sales were made without public solicitation, the stock certificates bear
restrictive legends and the warrants contain certain restrictions. No
underwriter was involved in the transactions, and no commissions were paid.

<TABLE>
<CAPTION>
ITEM 27. EXHIBITS.

EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
1.1* Form of Underwriting Agreement
3.1 Articles of Incorporation
3.2 Bylaws
4.1* Specimen Common Stock Certificate
4.2 See Exhibits 3.1 and 3.2 hereto for provisions of the Articles of Incorporation and Bylaws
defining rights of holders of the Common Stock.
5.1 Legal Opinion of Troutman Sanders LLP
10.1* Shopping Center Form Lease, dated March 23, 1998, between W.B. Wiggins, Jr., and
Chattahoochee National Bank
10.2* Employment Agreement, dated as of November 1, 1997 among Chattahoochee National Bank (In
Organization), CNB Holdings, Inc. and H. N. Padget, Jr.
10.3* Form of CNB Holdings, Inc. Organizers' Warrant Agreement
10.4 CNB Holdings, Inc. 1998 Incentive Stock Option Plan and Form of Incentive Stock Option Agreement
10.5 CNB Holdings, Inc. Non Qualified Stock Option Plan
21.1 Subsidiaries of CNB Holdings, Inc.
23.1 Consent of Bricker & Melton, P.A.
23.2 Consent of Troutman Sanders LLP (contained in Exhibit 5.1)
24.1 Power of Attorney (Reference is made to page II-3)
27.1 Financial Data Schedule (for SEC use only).
</TABLE>

- -------------
* To be filed by amendment.

ITEM 28. UNDERTAKINGS.

The Registrant hereby undertakes to provide to the underwriter at the
closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to foregoing provisions, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes as follows:

(a)(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to:

(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;

II-2

<PAGE> 52

(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information set forth in the Registration Statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement;

(iii) Include any additional or changed material information
on the plan of distribution.

(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.

(3) File a post-effective amendment to remove from registration
any of the securities being registered that remain unsold at the end of the
offering.

The Registrant hereby undertakes as follows:

(1) For determining any liability under the Securities Act, to
treat the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant under Rule 424(b)(1), or (4) or 497(h) under
the Securities Act as part of this Registration Statement as of the time the
Commission declared it effective.

(2) For determining any liability under the Securities Act, to
treat each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the Registration Statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.

II-3

<PAGE> 53

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned in the city of
Alpharetta, State of Georgia, on April 1, 1998.

CNB HOLDINGS, INC.

By:/s/ H. N. Padget, Jr.
-------------------------------------
H. N. Padget, Jr.
President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints jointly and severally, H. N. Padget, Jr.
and W. David Sweatt, and each one of them, their respective attorney-in-fact,
each with the power of substitution, for him in any and all capacities, to sign
any and all amendments to this Registration Statement (including post-effective
amendments), and to file the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or their
respective substitute or substitutes, may do or cause to be done by virtue
hereof.

In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ H. N. Padget, Jr. President, Chief Executive Officer and March 31, 1998
- ------------------------------------ Director
H. N. Padget, Jr.

/s/ W. David Sweatt
- ------------------------------------ Chairman of the Board of Directors March 31, 1998
W. David Sweatt

/s/ Valerie Donnell
- ------------------------------------ Chief Financial Officer March 31, 1998
Valerie Donnell

/s/ Michael L. Aldredge
- ------------------------------------ Director March 31, 1998
Michael L. Aldredge

/s/ C. Dan Alford
- ------------------------------------ Director March 31, 1998
C. Dan Alford

/s/ Patricia R. Grimes
- ------------------------------------ Director March 31, 1998
Patricia R. Grimes

/s/ William H. Groce, Jr.
- ------------------------------------ Secretary and Director March 31, 1998
William H. Groce, Jr.

/s/ David R. Hink
- ------------------------------------ Director March 31, 1998
David R. Hink
</TABLE>

II-4
<PAGE> 54

/s/ Mary E. Johnson
- ------------------------------------ Director March 31, 1998
Mary E. Johnson

- ------------------------------------ Director , 1998
Robert W. Johnston

/s/ Heber N. Padget, Sr.
- ------------------------------------ Director March 31, 1998
Heber N. Padget, Sr.

/s/ John A. Pond
- ------------------------------------ Director March 31, 1998
John A. Pond

/s/ Reid W. Simmons
- ------------------------------------ Director March 31, 1998
Reid W. Simmons

/s/ W. Darrell Sumner
- ------------------------------------ Director March 31, 1998
W. Darrell Sumner
</TABLE>

II-5

<PAGE> 55

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT DESCRIPTION NUMBERED PAGE
- ------- ----------- -------------

<S> <C> <C>
1.1* Form of Underwriting Agreement................................................
3.1 Articles of Incorporation.....................................................
3.2 Bylaws.......................................................................
4.1* Specimen Common Stock Certificate.............................................
4.2 See Exhibits 3.1 and 3.2 hereto for provisions of the Articles of Incorporation and
Bylaws defining rights of holders of the Common Stock......................
5.1 Legal Opinion of Troutman Sanders LLP.........................................
10.1* Shopping Center Form Lease, dated March 23, 1998, between W.B. Higgins, Jr.
and Chattahoochee National Bank..........................................
10.2* Employment Agreement, dated as of November 1, 1997 among
Chattahoochee National Bank (In Organization), CNB Holdings,
Inc. and H. N. Padget, Jr................................................
10.3* Form of CNB Holdings, Inc. Organizers' Warrant Agreement......................
10.4 CNB Holdings, Inc. 1998 Incentive Stock Option Plan and Form of Incentive
Stock Option Agreement........................................................
10.5 CNB Holdings, Inc. Non Qualified Stock Option Plan............................
21.1 Subsidiaries of CNB Holdings, Inc.............................................
23.1 Consent of Bricker & Melton, P.A..............................................
23.2 Consent of Troutman Sanders LLP (contained in Exhibit 5.1)....................
24.1 Power of Attorney (Reference is made to page II-3)............................
27.1 Financial Data Schedule (for SEC use only)....................................
</TABLE>
- --------
* To be filed by amendment.

II-6

<PAGE> 1
EXHIBIT 3.1

ARTICLES OF INCORPORATION OF

CNB HOLDINGS, INC.

The name of the corporation is CNB Holdings, Inc.

II.

The corporation is organized pursuant to the Georgia Business
Corporation Code (the "Code").

III.

The object of the corporation is pecuniary gain and profit, and the
corporation is formed for the purpose of becoming and operating as a bank
holding company and engaging in such related and permissible activities in
connection therewith as the Board of Directors may from time to time specify by
Resolution.

IV.

The corporation shall have authority to issue Ten Million (10,000,000)
shares of common stock, One Dollar ($1.00) par value, each of which shall have
the following rights, privileges and conditions:

(a) At all times each holder of shares of common stock of the
corporation shall be entitled to one (1) vote for each said share outstanding in
the name of such holder on the books of the corporation.

(b) In the matter of dividends and assets, the rights of the
common shares shall be junior to the rights of the preferred shares, as
hereinafter provided.

The corporation shall have the authority to issue Ten Million
(10,000,000) shares of preferred stock, no par value, each of which preferred
shares shall have the following rights, privileges and conditions:

<PAGE> 2

(a) The preferred shares are senior to the common shares, and the
common shares are subject to the rights and preferences of the preferred shares
as hereinafter set forth;

(b) The preferred shares may be issued from time to time in one or
more series in any manner permitted by law, as determined from time to time by
the Board of Directors and stated in the Resolution or Resolutions providing for
the issuance of such shares adopted by the Board of Directors, pursuant to the
authority hereby granted. Each series is to be appropriately designated prior to
the issuance of any shares thereof, so as to distinguish the shares thereof from
the shares of all other series and classes;

(c) All preferred shares of each series shall be alike in every
particular except as to the following relative rights and preferences as to
which there may be variations between different series:

(i) the rate of dividend, the times of payment and the
date from which dividends are to be accumulated;

(ii) whether shares may be redeemed and, if so, the
redemption price and the terms and conditions of redemption;

(iii) the amount payable upon shares in event of voluntary
or involuntary liquidation;

(iv) purchase, retirement or sinking fund provisions, if
any, for the redemption or purchase of shares;

(v) the terms and conditions, if any, on which shares may
be converted; and

(vi) whether or not shares have voting rights, and the
extent of such voting rights, if any.

(d) The designation of each particular series of preferred shares
and its terms with respect to the foregoing particulars shall be fixed and
determined by the Board of Directors in any manner permitted by law and shall be
stated in the Resolution or Resolutions providing for the issuance of such
shares adopted by the Board of Directors pursuant to the authority hereby vested
in it before any shares of such series are issued and shall be set

<PAGE> 3

forth in full or in summary on the Certificates for such series. The Board of
Directors may from time to time increase the number of shares of any series of
preferred shares already created by providing that any unissued preferred shares
shall constitute part of such series or may decrease (but not below the number
of shares thereof then outstanding) the number of shares of any series of
preferred shares already created by providing that any unissued shares
previously assigned to such series shall no longer constitute part thereof;

(e) The Board of Directors is hereby empowered to classify or
reclassify any unissued preferred shares from time to time by fixing or altering
the terms thereof with respect to the above-mentioned particulars and by
assigning the same to an existing or newly created series;

(f) The holders of preferred shares of each series shall be
entitled to receive, out of any funds legally available for such purpose, cash
dividends thereon when and as declared by the Board of Directors, at such rate
per annum as shall be fixed by Resolution of the Board of Directors for such
series, and no more;

(g) Unless otherwise provided by the Resolution of the Board of
Directors fixing and determining relative rights and preferences as permitted
herein, shares which are preferred as to dividends shall be deemed cumulative
preferred shares; shares which are preferred as to dividends shall not be
entitled to participate in dividends beyond the amount of the stated dividend
preference; dividends on shares which are preferred as to dividends shall
accumulate from the date of issuance of such shares; and shares which are
preferred as to dividends or as to payments upon liquidation shall not be
entitled to vote;

(h) So long as any preferred shares shall remain outstanding, no
dividend whatsoever (other than a dividend payable in shares ranking junior to
the preferred shares as to dividends and assets) shall be declared or paid upon,
nor shall any distribution be made or ordered with respect to, the common shares
or any other class of shares ranking junior to the preferred shares as to
dividends and assets; nor shall any moneys (other than the net proceeds received
from the sale of shares ranking junior to the preferred shares as to dividends
and assets) be set aside for or applied to the purchase or redemption (through a
sinking fund or otherwise) of common shares or of any other class of shares
ranking junior to the preferred shares as to dividends or assets; unless

<PAGE> 4

(i) all dividends on the preferred shares of all series for
past dividend periods shall have been paid and the full dividend on all
outstanding preferred shares of all series for the then current
dividend period shall have been paid or declared and set apart for
payment; and

(ii) the corporation shall have set aside all amounts, if any,
theretofore required to be set aside as and for a sinking fund, if any,
for the preferred shares of all series for the then current year, and
all defaults, if any, in complying with any such sinking fund
requirements of the previous years shall have been made good.

(i) The corporation, at the option of the Board of Directors, from
time to time may redeem the whole or any part of any series of preferred shares,
by paying therefor the amount which shall have been determined by the Board of
Directors in the Resolution or Resolutions authorizing such shares. Redemption
may be made of the whole or any part of the outstanding shares of any one (1) or
more series, in the discretion of the Board of Directors. If redemption is made
of part of a series, the shares to be redeemed may be selected by lot or all the
shares of such series may be redeemed pro rata, in such manner as may be
prescribed by Resolution of the Board of Directors;

(j) Subject to the foregoing provisions and to any qualifications,
limitations or restrictions which may be stated in the Resolution or Resolutions
providing for the issuance of a particular series of preferred shares, the Board
of Directors shall have authority to prescribe, from time to time, the manner in
which any series of preferred shares shall be redeemed; and

(k) Upon any liquidation, dissolution, or winding up of the
corporation, whether voluntary or involuntary, preferred shares of each series
shall be entitled to be paid the full preferential amount or amounts fixed by
the Board of Directors for such series as herein authorized, before any
distribution shall be made to the common shares or to any other class of shares
junior to the preferred shares as to dividends or assets. If upon such
liquidation, dissolution, or winding up of the corporation, whether voluntary or
involuntary, the net assets of the corporation shall be insufficient to permit
the payment of the full preferential amount to which all outstanding preferred
shares of all series are respectively entitled, the entire net assets of the
corporation shall be distributed ratably to all outstanding preferred shares in
proportion to the full preferential amount to which they are entitled.

<PAGE> 5

Neither a consolidation or merger of the corporation with or into any other
corporation or corporations nor the sale of all or substantially all of the
assets of the corporation shall be deemed to be a liquidation, dissolution, or
winding up within the meaning of this clause.

VI.

The initial registered office of the corporation shall be at 1580
Warsaw Road, Roswell, Georgia 30076. The initial registered agent of the
corporation shall be W. David Sweatt.

VII.

The mailing address of the initial principal office of the corporation
is at 1580 Warsaw Road, Roswell, Georgia 30076.

VIII.

No liquidation or dissolution of the corporation, nor any action that
would result in the same or other disposition of all or substantially all of the
assets of the corporation, shall be valid unless such action is approved by the
affirmative vote of the holders of at least two-thirds (2/3) of the issued and
outstanding shares of each class of capital stock then entitled to vote on such
matters as a class and of the total shares entitled to vote thereon; provided,
however, that if any such action has been approved prior to the vote by the
shareholders by a majority of the corporation's Board of Directors, the
affirmative vote of the holders of a majority of the issued and outstanding
shares of each class of capital stock of the corporation then entitled to vote
on such matters as a class and of the total shares entitled to vote thereon
shall be required.

IX.

The Board of Directors shall be divided into three (3) classes, Class
I, Class II and Class III, which shall be as nearly equal in number as possible.
Each director in Class I shall be elected to an initial term of one (1) year,
each director in Class II shall be elected to an initial term of two (2) years,
each director in Class III shall be elected to an initial term of three (3)
years, to serve until the election and qualification of their successors or
until their earlier resignation, death or removal from office.

<PAGE> 6

Upon the expiration of these initial terms, all directors shall be
elected for three-year, staggered terms.

At any shareholders' meeting with respect to which notice of such
purpose has been given, the entire Board of Directors or any individual director
may be removed without cause only by the affirmative vote of the holders of
two-thirds (2/3) of the issued and outstanding shares of each class of capital
stock of the corporation then entitled to vote on such matters as a class and of
the total shares entitled to vote thereon. At any shareholders' meeting with
respect to which notice of such purpose has been given, the entire Board of
Directors or any individual director may be removed with cause only by the
affirmative vote of the holders of a majority of the issued and outstanding
shares of each class of capital stock of the corporation then entitled to vote
on such matters as a class and of the total shares entitled to vote thereon.

XI.

The Board of Directors may, if it deems it advisable, oppose a tender
or other offer for the corporation's securities, whether the offer is in cash or
in the securities of a corporation or otherwise. When considering whether to
oppose an offer, the Board of Directors may, but is not legally obligated to,
consider any pertinent issues; by way of illustration, but not of limitation,
the Board of Directors may, but shall not be legally obligated to, consider all
or any of the following:

(a) whether the offer price is acceptable based on the historical and
present operating results or financial condition of the corporation;

(b) whether a more favorable price could be obtained for the
corporation's securities in the future;

(c) the impact which an acquisition of the corporation would have on
the employees, depositors and customers of the corporation and its subsidiaries
and the communities which they serve;

(d) the reputation and business practices of the offeror and its
management and affiliates as they would affect the employees, depositors and
customers of the corporation and its subsidiaries and the future value of the
corporation's stock;

<PAGE> 7

(e) the value of the securities, if any, that the offeror is offering
in exchange for the corporation's securities, based on an analysis of the worth
of the corporation compared to the corporation or any other entity whose
securities are being offered; and

(f) any antitrust or other legal or regulatory issues that are raised
by the offer.

If the Board of Directors determines that an offer should be rejected,
it may take any lawful action to accomplish its purpose including, but not
limited to, any or all of the following: advising shareholders not to accept the
offer, litigation against the offeror, filing complaints with governmental and
regulatory authorities, acquiring the corporation's securities, selling or
otherwise issuing authorized but unissued securities or treasury stock or
granting options with respect thereto, acquiring a company to create an
antitrust or other regulatory problem for the offeror and soliciting a more
favorable offer from another individual or entity.

XII.

The provisions of the Code's Fair Price Statute (O.C.G.A. ss.ss.
14-2-1110 to 14-2-1113) shall apply to the corporation.

XIII.

The provisions of the Code's Business Combination Statute (O.C.G.A.
ss.ss. 14-2-1131 to 14-2-1133) shall apply to the corporation.

XIV.

The authority to make, amend, alter, change or repeal the Bylaws of the
corporation is hereby expressly and solely granted to and vested in the Board of
Directors of the corporation, subject always to the power of shareholders to
make, amend, alter, change or repeal the Bylaws of the corporation by the
affirmative vote of the holders of two-thirds (2/3) of the issued and
outstanding shares of each class of capital stock of the corporation then
entitled to vote on such matters as a class and of the total shares entitled to
vote thereon.

<PAGE> 8

XV.

The shareholders of the corporation shall not have any right of
cumulative voting in the election of directors or on any other matters on which
they are entitled to vote.

XVI.

The shareholders of any class of stock of the corporation shall not
have any preemptive rights with respect to authorized and unissued shares of the
same class in the event of a proposed sale of such shares.

XVII.

A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for any action taken, or
failure to take any action, as a director, except for liability for:

(i) any appropriation, in violation of his duties, of any
business opportunity of the corporation;

(ii) acts or omissions which involve intentional misconduct
or a knowing violation of law;

(iii) the types of liability set forth in Code Section
14-2-832 dealing with unlawful distributions of corporate assets to
shareholders; or

(iv) any transaction from which the director derived an
improper personal benefit.

XVIII.

The corporation shall not commence business until it shall have
received than the sum of Five Hundred Dollars ($500).

XIX.

The name and address of the incorporator is:

Thomas O. Powell
Troutman Sanders LLP
NationsBank Plaza
600 Peachtree Street, NE, Suite 5200
Atlanta, Georgia 30308-2216

<PAGE> 9

XX.

The corporation reserves the right to amend, alter or repeal any
provision contained in these Articles of Incorporation in the manner now or
hereafter prescribed by statute, and all rights conferred on shareholders herein
are granted subject to this reservation. Notwithstanding the preceding sentence,
the provisions set forth in this Article XX and Articles IX, X, XI, XIV and XVII
hereof may not be altered, amended or repealed in any respect, and no other
provision(s) may be adopted which would impair in any respect the operation or
effect of any such provisions, except by the affirmative vote of the holders of
at least two-thirds (2/3) of the voting power of the then outstanding shares of
capital stock, voting together as a single class; provided, however, that such
two-thirds (2/3) voting requirement shall not be applicable if the Board of
Directors of the corporation shall approve such action by resolution adopted by
at least two-thirds (2/3) of the directors then in office, in which case the
affirmative vote of holders of a majority of the then outstanding shares of
capital stock entitled to be cast at the meeting of shareholders called for that
purpose, voting together as a single class, shall be required to approve such
action.

XXI.

Should any provision of these Articles of Incorporation, or any clause
hereof, be held to be invalid, illegal or unenforceable, in whole or in part,
the remaining provisions and clauses of these Articles of Incorporation shall
remain valid and fully enforceable.

IN WITNESS WHEREOF, the undersigned has caused these Articles of
Incorporation this 5th day of November, 1997.

/s/ Thomas O. Powell
--------------------------------
Thomas O. Powell

<PAGE> 1

EXHIBIT 3.2
BYLAWS
OF
CNB HOLDINGS, INC.

ARTICLE ONE

OFFICES

1.1 The corporation may have offices at such place or places (within or
without the State of Georgia) permitted under state law and as the Board of
Directors may from time to time determine or the business of the corporation may
require or make desirable.

ARTICLE TWO

SHAREHOLDERS' MEETINGS

2.1 All meetings of the shareholders shall be held at the principal
offices of the corporation, or at such other place or places within or without
the State of Georgia as may be fixed from time to time by the Board of
Directors.

2.2 An annual meeting of the shareholders shall be held each year on
such date and at such time as the Board of Directors shall determine, at which
time the shareholders shall elect directors and transact such other business as
may properly be brought before the meeting.

2.3 Special meetings of the shareholders, for any purpose or purposes,
unless otherwise prescribed by statute or the Articles of Incorporation, may be
called by the President, and shall be called by the President or the Secretary
when so directed by the Board of Directors, or at the request in writing of any
two or more directors, or at the request in writing of shareholders holding not
less than two-thirds (2/3) of the outstanding shares of the corporation entitled
to vote in an election of directors. Any such written request shall be signed
and dated and shall state the purpose or purposes of the proposed meeting.

2.4 Except as otherwise required by statute or the Articles of
Incorporation, written notice of each meeting of the shareholders, whether
annual or special, shall be served, either personally or by mail, upon each
shareholder of record entitled to vote at such meeting, not less than 10 nor
more than 60 days before such meeting.

<PAGE> 2

If mailed, such notice shall be directed to a shareholder at his post office
address last shown on the records of the corporation. Notice of any special
meeting of shareholders shall state the purpose or purposes for which the
meeting is called. Notice of any meeting of shareholders shall not be required
to be given to any shareholder who, in person or by his attorney thereunto
authorized, either before or after such meeting, shall waive such notice.
Attendance of a shareholder at a meeting, either in person or by proxy, shall of
itself constitute waiver of notice and waiver of any and all objections to the
place of the meeting, the time of the meeting and the manner in which it has
been called or convened, except when a shareholder attends a meeting solely for
the purpose of stating, at the beginning of the meeting, any such objection or
objections to the transaction of business. Notice of any adjourned meeting need
not be given otherwise than by announcement at the meeting at which the
adjournment is taken.

2.5 The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum at all meetings of the shareholders for
the transaction of business, except as otherwise provided by law, by the
Articles of Incorporation or by these bylaws. If, however, such majority shall
not be present or represented at any meeting of the shareholders, the
shareholders entitled to vote thereat, present in person or by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of voting stock shall be
present. At such adjourned meeting at which a quorum shall be present in person
or by proxy, any business may be transacted that might have been transacted at
the meeting as originally called.

2.6 At every meeting of the shareholders, including (but without
limitation of the generality of the foregoing language) meetings of shareholders
for the election of directors, any shareholder having the right to vote shall be
entitled to vote in person or by proxy, but no proxy shall be voted after 11
months from its date, unless said proxy provides for a longer period. Each
shareholder shall have one vote for each share of stock having voting power,
registered in his name on the books of the corporation. If a quorum is present,
the affirmative vote of two-thirds (2/3) of the shares represented at the
meeting and entitled to vote on the subject matter shall be the act of the
shareholders, except as otherwise provided by law, by the Articles of
Incorporation or by these bylaws.

2.7 Any action required or permitted by the Articles of Incorporation
or these bylaws to be taken at a shareholders' meeting may be taken without a
meeting if the action is taken by all the shareholders entitled to vote on the
action. The action must be evidenced by one or more written consents bearing the
date of signature and

<PAGE> 3

describing the action taken, signed by shareholders entitled to take action
without a meeting and delivered to the corporation for inclusion in the minutes
or filing with the corporate records.

ARTICLE THREE

DIRECTORS

3.1 Except as may be otherwise provided by any legal agreement among
shareholders, the property and business of the corporation shall be managed by
its Board of Directors. In addition to the powers and authority by these bylaws
expressly conferred upon it, the Board of Directors may exercise all such powers
of the corporation and do all such lawful acts and things as are not by law, by
any legal agreement among shareholders, by the Articles of Incorporation or by
these bylaws directed or required to be exercised or done by the shareholders.

3.2 The Board of Directors of the corporation shall consist of not less
than five nor more than 25 persons, with the exact number within such minimum
and maximum list to be fixed and determined from time to time by resolution of
the Board of Directors, or by resolution of the shareholders at any annual or
special meeting of the shareholders. Directors will be elected to three-year
terms and staggered such that approximately one-third (1/3) of the directors
seats are up for election each year. The Board of Directors may increase or
decrease the number of directors by not more than three in any one year, so long
as such increase or decrease does not place the number of directors at less than
five, nor more than 25. Except as provided in Section 3.4 hereof, the directors
shall be elected by the affirmative vote of a majority of the shares represented
at the annual meeting of the shareholders. Each director, except in the case of
his earlier death, resignation, retirement, disqualification or removal, shall
serve a staggered term of three years and shall serve until his successor shall
have been elected and qualified.

3.3 Directors shall be natural persons of the age of 21 or over. Each
director shall own a qualifying equity interest of common or preferred stock of
the national bank that is a subsidiary of the corporation or of the corporation
with an aggregate par value, aggregate fair market value or aggregate
shareholders' equity value of not less than One Thousand Dollars ($1,000), as of
either (i) the date of purchase or (ii) the date on which the individual became
a director, whichever value is greater. Any combination of common or preferred
stock of the association or the corporation may be used.

<PAGE> 4

3.4 If any vacancy shall occur among the directors by reason of death,
resignation, incapacity to serve, increase in the number of directors, or
otherwise, the remaining directors shall continue to act, and such vacancies may
be filled by a majority of the directors then in office, though less than a
quorum, and, if not theretofore filled by action of the directors, may be filled
by the shareholders at any meeting held during the existence of such vacancy.

3.5 Directors may be allowed such compensation for attendance at
regular or special meetings of the Board of Directors and of any special or
standing committees thereof as may be from time to time determined by resolution
of the Board of Directors.

3.6 The Directors may elect a Chairman of the Board of Directors who
shall have such duties and such authority as described in Section 6.5 of these
bylaws.

3.7 The entire Board of Directors or any individual director may be
removed from office without cause by the affirmative vote of the holders of
two-thirds (2/3) of the shares entitled to vote at an election of directors. In
addition, the Board of Directors may remove a director from office if such
director is adjudicated as incompetent by a court, if he is convicted of a
felony, if he does not, within 60 days after his election, accept the office in
writing or by attendance at a meeting of the Board of Directors and fulfill any
other requirements for holding the office of director, or if he fails to attend
regular meetings of the Board of Directors for six consecutive meetings without
having been excused by the Board of Directors.

3.8 The Board of Directors of the corporation may appoint any
individual as an honorary director, director emeritus, or member of any advisory
board established by the Board of Directors. Any individual appointed as
honorary director, director emeritus, or member of an advisory board as provided
by this Section 3.8 may be compensated as provided in Section 3.5, but such
individual may not vote at any meeting of the Board of Directors or be counted
in determining a quorum as provided in Section 5.5 and shall not have any
responsibility or be subject to any liability imposed upon a director, or
otherwise be deemed a director.

<PAGE> 5

ARTICLE FOUR

COMMITTEES

4.1 The Board of Directors may by resolution adopted by a majority
of the entire Board, designate an Executive Committee of five or more directors.

4.1.1 Each member of the Executive Committee shall hold office
until the first meeting of the Board of Directors after the annual
meeting of shareholders next following his election and until his
successor member of the Executive Committee is elected, or until his
death, resignation or removal, or until he shall cease to be a
director.

4.1.2 During the intervals between the meetings of the Board
of Directors, the Executive Committee may exercise all of the powers of
the Board of Directors in the management of the business affairs of the
corporation, including all powers herein or in the Articles of
Incorporation specifically granted to the Board of Directors, and may
authorize the seal of the corporation to be affixed to all papers which
may require it; provided, however, that the Executive Committee shall
not have the power to amend or repeal any resolution of the Board of
Directors that by its terms shall not be subject to amendment or repeal
by the Executive Committee, and the Executive Committee shall not have
the authority of the Board of Directors in reference to (i) amending
the Articles of Incorporation or bylaws of the corporation; (ii)
adopting a plan of merger or consolidation; (iii) the sale, lease,
exchange or other disposition of all or substantially all of the
property and assets of the corporation; or (iv) a voluntary dissolution
of the corporation or a revocation of any such voluntary dissolution.

4.1.3 The Executive Committee shall meet from time to time on
call of the Chairman of the Board, resident or of any three or more
members of the Executive Committee. Meetings of the Executive Committee
may be held at such place or places, within or without the State of
Georgia, as the Executive Committee shall determine or as may be
specified or fixed in the respective notices or waivers of such
meetings. The Executive Committee may fix its own rules of procedure,
including provision for notice of its meetings. It shall keep a record
of its proceedings and shall report these proceedings to the Board of
Directors at the meeting thereof held next after they have been taken,
and all such proceedings shall be subject to revision or alteration by
the Board of Directors except to the extent that action shall have been
taken pursuant to or in reliance upon such proceedings prior to any
such revision or alteration.

<PAGE> 6

4.1.4 The Executive Committee shall act by majority vote of
its members.

4.1.5 The Board of Directors, by resolution adopted in
accordance with paragraph 4.1 of this Section, may designate one or
more directors as alternate members of any such committee, who may act
in the place and stead of any absent member or members at any meeting
of such committee.

4.2 The Board of Directors, by resolution adopted by a majority of
the entire Board, may designate one or more additional committees, each
committee to consist of three or more of the directors of the corporation, which
shall have such name or names and shall have and may exercise such powers of the
Board of Directors in the management of the business and affairs of the
corporation, except the powers denied to the Executive Committee, as may be
determined from time to time by the Board of Directors.

4.3 The Board of Directors shall have power at any time to remove
any member of any committee, with or without cause, and to fill vacancies in and
to dissolve any such committee.

ARTICLE FIVE

MEETINGS OF THE BOARD OF DIRECTORS

5.1 Each newly elected Board of Directors shall meet at the place
and time which shall have been determined, in accordance with the provisions of
these bylaws, for the holding of the regular meeting of the Board of Directors
scheduled to be held next following the annual meeting of the shareholders at
which the newly elected Board of Directors shall have been elected, or, if no
place and time shall have been fixed for the holding of such meeting of the
Board of Directors, then immediately following the close of such annual meeting
of shareholders and at the place thereof, or such newly elected Board of
Directors may hold such meeting at such place and time as shall be fixed by the
consent in writing of all the directors. In any such case no notice of such
meeting to the newly elected directors shall be necessary in order to legally
constitute the meeting.

5.2 Regular meetings of the Board of Directors may be held without
notice at such time and place (within or without the State of Georgia) as shall
from time to time be determined by the Board of Directors.

5.3 Special meetings of the Board of Directors may be called by
the President on not less than two days notice by mail, telegram, cablegram or
personal delivery to each director and shall be called by the President or the
Secretary in like manner and on like notice on the written request of any two or
more directors. Any such

<PAGE> 7

special meeting shall be held at such time and place (within or without the
State of Georgia) as shall be stated in the notice of meeting.

5.4 No notice of any meeting of the Board of Directors need state the
purposes thereof.

5.5 At all meetings of the Board of Directors, the presence of a
majority of the number of directors in office shall be necessary and sufficient
to constitute a quorum for the transaction of business. Directors may
participate in any meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by means of such
communications equipment shall constitute the presence in person at such
meeting. The act of a majority of the directors present at any meeting at which
there is a quorum shall be the act of the Board of Directors, except as may be
otherwise specifically provided by law, by the Articles of Incorporation or by
these bylaws. In the absence of a quorum, a majority of the directors present at
any meeting may adjourn the meeting from time to time until a quorum be had.
Notice of any adjourned meeting need only be given by announcement at the
meeting at which the adjournment is taken.

5.6 Any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a meeting
if, prior to such action, a written consent thereto is signed by all members of
the Board or of such committee, as the case may be, and such written consent is
filed with the minutes of the proceedings of the Board or committee.

ARTICLE SIX

OFFICERS

6.1 The Board of Directors at its first meeting after each annual
meeting of shareholders shall elect the following officers: a Chairman, a
President, a Secretary and a Treasurer. The Board of Directors at any time and
from time to time may appoint such other officers as it shall deem necessary,
including one or more Vice-Presidents (one of whom may be designated Executive
Vice-President), one or more Assistant Vice-Presidents, one or more Assistant
Treasurers, and one or more Assistant Secretaries, who shall hold their offices
for such terms as shall be determined by the Board of Directors and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors.

6.2 Any person may hold any two or more offices. No officer needs to be
a shareholder.

<PAGE> 8

6.3 The salaries of the officers of the corporation shall be fixed by
the Board of Directors, except that the Board of Directors may delegate to any
officer or officers the power to fix the compensation of any officer appointed
in accordance with the second sentence of Section 6.1 of these bylaws.

6.4 Each officer of the corporation shall hold office until his
successor is chosen or until his earlier resignation, death or removal, or the
termination of his office. Any officers may be removed by a majority vote of the
Board of Directors whenever in its judgment the best interest of the corporation
will be served thereby.

Chairman of the Board

6.5 The Chairman of the Board shall preside and act as chairman at all
meetings of the shareholders and the Board of Directors and shall perform such
other duties as the Board of Directors may from time to time direct. He shall be
ex officio a member of all standing committees, unless otherwise provided in the
resolution appointing the same.

President

6.6 The President shall be the chief executive officer of the
corporation and shall have general control and supervision over the business
affairs of the corporation and shall see that all orders and resolutions of the
Board of Directors are carried into effect. He shall be ex officio a member of
all standing committees, unless otherwise provided in the resolution appointing
the same. In the absence of the Chairman of the Board, the President shall call
meetings of the shareholders, the Board of Directors and the Executive Committee
to order and shall act as chairman of such meetings.

Vice-Presidents

6.7 The Vice-Presidents shall have the duty of managing the daily
operation and activities of the corporation, of supervising its personnel and
the profitable utilization of its facilities and equipment, and of assisting the
President with operating his duties as chief executive officer. The
Vice-Presidents shall perform such other duties and exercise such other powers
as the Board of Directors shall request or delegate. Vice-Presidents may be
designated Executive Vice-President with such additional duties as are
prescribed by the Board of Directors. The

<PAGE> 9

Assistant Vice-Presidents shall have such powers, and shall perform such duties,
as may be prescribed from time to time by the Board of Directors, or the
President.

Secretary

6.8 The Secretary shall attend all meetings of the Board of Directors
and all meetings of the shareholders and record all votes and the minutes of all
proceedings in books to be kept for that purpose and shall perform like duties
for the standing committees when required. He shall give, or cause to be given,
any notice required to be given of any meetings of the shareholders and of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors, under whose supervision he shall be. He shall keep in
safe custody the seal of the corporation and when authorized by the Board of
Directors, shall affix the seal to any instrument requiring it and by his
signature attest tile seal or shall cause the signature of the Treasurer to
attest the seal. The Assistant Secretary or Assistant Secretaries shall, in the
absence or disability of the Secretary, or at his request perform his duties and
exercise his powers and authority.

Treasurer

6.9 The Treasurer shall have charge of and be responsible for all
funds, securities, receipts and disbursements of the corporation, and shall
deposit, or cause to be deposited, in the name of the corporation, all monies or
other valuable effects, in such banks, trust companies or other depositories as
shall, from time to time, be selected by the Board of Directors; he shall render
to the President and to the Board of Directors, whenever requested, an account
of the financial condition of the corporation, and in general, he shall perform
all the duties incident to the office of a Treasurer of a corporation, and such
other duties as may be assigned to him by the Board of Directors, or the
President.

6.10 In case of the absence of any officers of the corporation, or for
any other reason that the Board of Directors may deem sufficient, the Board of
Directors may delegate, for the time being, any or all of the powers or duties
of such officer to any officer or to any director.

<PAGE> 10

ARTICLE SEVEN

DIVIDENDS

7.1 Dividends upon the outstanding shares of the corporation may be
declared by the Board of Directors at any regular or special meeting and may be
paid in cash or property only out of the unreserved and unrestricted retained
earnings of the corporation, or out of the unreserved and unrestricted net
earnings of the current fiscal year, computed to the date of declaration of the
dividend, or the next preceding fiscal year.

7.2 Dividends may be declared by the Board of Directors and paid in the
shares of the corporation out of any treasury shares that have been reacquired
out of the capital funds of the corporation.

7.3 Dividends may be declared by the Board of Directors and paid in the
authorized but unissued shares of the corporation out of any retained earnings
of the corporation; provided that such shares shall be issued at not less than
the par value thereof, there shall be transferred to capital stock at the time
such dividend is paid an amount of retained earnings at least equal to the
aggregate par value of the shares to be issued as a dividend.

7.4 A split or division of the issued shares of any class into a
greater number of shares of the same class without increasing capital stock of
the corporation shall not be construed to be a share dividend within the meaning
of this Article.

ARTICLE EIGHT

CAPITAL STOCK

8.1 The par value and the maximum number of shares of any class of the
stock of the corporation shall be set forth from time to time in the Articles of
Incorporation of the corporation.

8.2 The interest of each shareholder shall be evidenced by a
certificate or certificates representing shares of stock of the corporation
which shall be in such form as the Board of Directors may from time to time
adopt and shall be numbered and shall be entered in the books of the corporation
as they are issued. Each certificate shall exhibit the holder's name, the number
of shares and class of shares and series, if any, represented thereby, a
statement that the corporation is organized under the laws of the State of
Georgia, and the par value of each share or a statement that the shares are
without par value. Each certificate shall be signed by the Chairman, President
and the Secretary or the Treasurer and shall be sealed with the seal of the
corporation; provided, however, that where such

<PAGE> 11

certificate is signed by a transfer agent, or by a transfer clerk acting on
behalf of the corporation and a registrar, the signature of any such officer and
such seal, may be facsimile. In case any officer or officers who shall have
signed, or whose facsimile signature or signatures shall have been used on, any
such certificate or certificates shall cease to be such officer or officers of
the corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the corporation, such
certificate or certificates may nevertheless be delivered as though the person
or persons who signed such certificate or certificates or whose facsimile
signatures shall have been used thereon had not ceased to be such officer or
officers.

8.3 The corporation shall keep a record of the shareholders of the
corporation which readily shows, in alphabetical order or by alphabetical index,
the names of the shareholders entitled to vote, with the addresses of and the
number of shares held by each. Said record shall be presented at all meetings of
the shareholders.

8.4 Transfers of stock shall be made on the books of the corporation
only by the person named in the certificate, or by attorney lawfully constituted
in writing, and upon surrender of the certificate therefor, or in the case of a
certificate alleged to have been lost, stolen or destroyed, upon compliance with
the provisions of Section 8.9 of these bylaws.

8.5 For the purpose of determining shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment thereof, or
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not to
exceed 50 days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least 10 days immediately
preceding such meeting.

8.6 In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the record date for any such determination of
shareholders, such date to be not more than 50 days, and in case of a meeting of
shareholders, not less than 10 days, prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken.

<PAGE> 12

8.7 The corporation shall be entitled to treat the holder of any share
of stock of the corporation as the person entitled to vote such share, to
receive any dividend or other distribution with respect to such share, and for
all other purposes and accordingly shall not be bound to recognize any equitable
or other claim to or interest in such share on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.

8.8 The Board of Directors may appoint one or more transfer agents and
one or more registrars and may require each stock certificate to bear the
signature or signatures of a transfer agent or a registrar or both.

8.9 Any person claiming a certificate of stock to be lost, stolen or
destroyed shall make an affidavit or affirmation of the fact in such manner as
the Board of Directors may require and shall if the directors so require, give
the corporation a bond of indemnity in form and amount and with one or more
sureties satisfactory to the Board of Directors, whereupon an appropriate new
certificate may be issued in lieu of the one alleged to have been lost, stolen
or destroyed.

ARTICLE NINE

MISCELLANEOUS

Fair Price Statute

9.1 The provisions of the Georgia Business Corporation Code's (the
"Code") Fair Price Statute (O.C.G.A. ss.ss. 14-2-1110 to 14-2-1113) shall apply
to the corporation.

Business Combination Statute

9.2 The provisions of the Code's Business Combination Statute (O.C.G.A.
ss.ss. 14-2-1131 to 14-2-1133) shall apply to the corporation.

Inspection of Books

9.3 The Board of Directors shall have power to determine which accounts
and books of the corporation, if any, shall be open to the inspection of
shareholders, except such as may by law be specifically open to inspection, and
shall have power to fix reasonable rules and regulations not in conflict with
the applicable law for

<PAGE> 13

the inspection of accounts and books which by law or by determination of the
Board of Directors shall be open to inspection, and the shareholders' rights in
this respect are and shall be restricted and limited accordingly.

Fiscal Year

9.4 The corporation shall operate in accordance with the calendar year.

Corporate Seal

9.5 The corporate seal shall be in such form as the Board of Directors
may from time to time determine.

9.6 Such of the officers or employees of the corporation as may from
time to time be designated by the Board of Directors or by the Executive
Committee shall have power and authority to sign contracts, checks, drafts and
like instruments and to endorse checks, bills of exchange, orders, drafts and
vouchers made payable or endorsed to the corporation, whether in its own right
or in any fiduciary capacity. No officer or employee, however, may on behalf of
the corporation, execute or deliver any check, draft or other like instrument in
favor of himself.

9.7 All matters covered in these bylaws shall be subject to such
restrictions as shall be imposed on this corporation by appropriate state and
federal laws and regulations.

ARTICLE TEN

NOTICES AND WAIVER OF NOTICE

10.1 Except as otherwise specifically provided in these bylaws,
whenever, under the provisions of these bylaws, notice is required to be given
to any shareholder, director, officer, or committee member, it shall not be
construed to mean personal notice, but such notice may be given either by
personal notice or by cable or telegraph, or by mail by depositing the same in
the post office or letter box in a postpaid sealed wrapper, addressed to such
shareholder, officer or director at such address as appears on the books of the
corporation, and such notice shall be deemed to be given at the time when the
same shall be thus sent or mailed.

10.2 When any notice whatever is required to be given by law, by the
Articles of Incorporation or by these bylaws, a waiver thereof by the person or
persons entitled to said notice given before or after the time stated

<PAGE> 14

therein, in writing, which shall include a waiver given by telegraph, or cable,
shall be deemed equivalent thereto. No notice of any meeting need be given to
any person who shall attend such meeting.

ARTICLE ELEVEN

REIMBURSEMENT OF SALARY

11.1 Any payments made to an officer of the corporation, including, but
not limited to salaries, commissions, interest, bonuses, rent, or reimbursement
of expenses incurred by him, which shall be disallowed in whole or in part as a
deductible expense of the corporation by the Internal Revenue Service shall be
reimbursed by such officer to the corporation to the extent of such
disallowance. It shall be the duty of the Board of Directors to enforce payment
of each such amount disallowed. In lieu of payment by the officer subject to the
approval of the Board of Directors, proportionate amounts may be withheld from
his future compensation payments until the amount owed to the corporation has
been received.

ARTICLE TWELVE

AMENDMENTS

12.1 The Board of Directors shall have the express, exclusive and sole
power to amend or repeal and adopt bylaws but any bylaws adopted by the Board of
Directors may be amended or repealed, and new bylaws adopted by the affirmative
vote of the holders of two-thirds (2/3) of the shares of capital stock of the
corporation then issued, outstanding and entitled to vote on such matters. The
shareholders may prescribe that any bylaw or bylaws adopted by them shall not be
altered, amended or repealed, by the Board of Directors.

12.2 Action taken by the shareholders with respect to bylaws shall be
taken by an affirmative vote of a majority of all shares entitled to elect
directors, and action by the Board of Directors with respect to bylaws shall be
taken by an affirmative vote of a majority of all directors then holding office.

12.3 A copy of the bylaws, with all amendments thereto, shall at all
times be kept in a convenient place in the principal offices of the corporation,
and shall be open to inspection by all shareholders during business hours. The
directors may furnish a copy of the bylaws and all amendments thereto, to all
shareholders, provided that all

<PAGE> 15

amendments and all directions by the Board of Directors shall be furnished to
the shareholders at the first meeting of the shareholders thereafter.

ARTICLE THIRTEEN

INDEMNIFICATION AND INSURANCE

13.1 The corporation shall have the power to indemnify any person who
was, is or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative ("Proceeding") (other than an action by or in the
right of the corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation or is or was serving at the
corporation's request as a director, officer, partner, trustee, employee or
agent of another domestic or foreign corporation, partnership, joint venture,
trust, employee benefit plan or other entity, against expenses (including
attorneys' fees), judgments, settlements, penalties, fines and reasonable
expenses incurred by him in connection with such action, suit or proceeding, if
he (i) conducted himself in good faith and (ii) reasonably believed (A) in the
case of conduct in his official capacity, that such conduct was in the best
interests of the corporation; (B) in all other cases, that such conduct was at
least not opposed to the best interests of the corporation; and (C) in the case
of any criminal action or proceeding, that he had no reasonable cause to believe
such conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent is not, of itself, determinative that the person did not meet the
standard of conduct described in this Section 13.1.

13.2 The corporation may not indemnify a person under this ARTICLE
THIRTEEN (i) in connection with a Proceeding by or in the right of the
corporation by reason of the fact he is or was a director, officer, employee or
agent of the corporation or is or was serving at the corporation's request as a
director, officer, partner, trustee, employee or agent of another domestic or
foreign corporation, partnership, joint venture, trust, employee benefit plan or
other entity except for reasonable expenses (including attorneys' fees) incurred
by him in connection with the Proceeding if it is determined that such person
has met the relevant standard of conduct under this ARTICLE THIRTEEN or (ii) in
connection with any Proceeding for which such person shall have been adjudged to
be liable

<PAGE> 16

on the basis that personal benefit was improperly received by him, whether or
not involving action in his official capacity.

13.3 To the extent that a director, officer, emloyee or agent of the
corporation has been wholly successful, on the merits or otherwise, in the
defense of any Proceeding to which he was a party because he was a director,
officer, employee or agent of the corporation, he shall be indemnified against
reasonable expenses (including attorneys' fees) incurred by him in connection
therewith.

13.4 Any indemnification under the above paragraphs (unless ordered by
a court) shall be made by the corporation only as authorized thereunder, upon a
determination for a specific Proceeding that indemnification of the director,
officer, employee or agent is permissible under the circumstances because he has
met the relevant standard of conduct set forth above. Such determination shall
be made:

(a) if there are two or more disinterested directors, by the
Board of Directors by a majority vote of all the disinterested
directors (a majority of whom shall for such purpose constitute a
quorum); or

(b) if a quorum cannot be obtained under (a) of this Section,
by a majority vote of the members of a committee consisting solely of
two or more disinterested directors appointed by a vote under (a) of
this Section; or

(c) by special legal counsel selected by the Board of
Directors or its committee in the manner prescribed in (a) or (b) of
this Section, or, if there are fewer than two disinterested directors,
selected by the Board of Directors (in which selection directors who do
not qualify as disinterested directors may participate); or

(d) by the shareholders, but shares owned by or voted under
the control of a director who at the time does not qualify as a
disinterested director may not be voted on the determination.

13.5 The corporation may, before the final disposition of a Proceeding,
advance funds to pay for or reimburse the reasonable expenses incurred by a
director, officer, employee or agent who is party to a Proceeding because he is
a director, officer, employee or agent if he delivers to the corporation (i) a
written affirmation of his good faith belief that he has met the relevant
standard of conduct set forth in Section 13.1 or (ii) a written undertaking to
repay any funds advanced if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized by these bylaws.
Authorizations under this Section 13.5 shall be made:

<PAGE> 17

(a) By the Board of Directors:

(1) When there are two or more disinterested
directors, by a majority vote of all the disinterested
directors (a majority of whom shall for such purpose
constitute a quorum) or by a majority of the members of a
committee of two or more disinterested directors appointed by
such vote; or

(2) When there are fewer than two disinterested
directors, by the vote necessary for action by the Board in
accordance with these bylaws, in which authorization directors
who do not qualify as disinterested directors may participate;
or

(b) By the shareholders, but shares owned or voted under
the control of a director who at the time does not qualify as a
disinterested director with respect to the Proceeding may not be voted
on the authorization.

13.6 The indemnification and advancement of expenses provided or
granted pursuant to this ARTICLE THIRTEEN shall not be deemed exclusive of any
other rights, in respect to indemnification or otherwise, to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
contract or resolution approved by the affirmative vote of the holders of a
majority of the shares entitled to vote thereon, both as to action in an
official capacity and as to action in another capacity while holding such
office, but shares owned or voted under the control of a director who at the
time does not qualify as a disinterested director with respect to the Proceeding
may not be voted on the authorization; provided, however, that the corporation
shall not indemnify a director, officer, employee or agent under this Section
for any liability incurred in a Proceeding in which such person is adjudged
liable to the corporation or is subject to injunctive relief in favor of the
corporation:

(a) For any appropriation, in violation of his duties, of any
business opportunity of the corporation;

(b) For acts or omissions which involve intentional misconduct
or a knowing violation of law;

(d) For any transaction from which he received an improper
personal benefit.

<PAGE> 18

13.7 The indemnification and advancement of expenses provided by or
granted pursuant to this ARTICLE THIRTEEN shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such person.

13.8 The corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation or who, while a director, officer, employee or agent of
the corporation, is or was serving at the corporation's request as a director,
officer, partner, trustee, employee or agent of another domestic or foreign
corporation, partnership, joint venture, trust, employee benefit plan or other
entity, against liability asserted against or incurred by him in that capacity
or arising out of his status as a director, officer, employee or agent, whether
or not the corporation would have the power to indemnify or advance expenses to
him against the same liability under these bylaws.

13.9 If any expenses or other amounts are paid by way of
indemnification or as an advance, otherwise than by court order or by an
insurance carrier pursuant to insurance maintained by the corporation, the
corporation shall report the indemnification or advance in writing to its
shareholders of record with or before the notice of the next shareholders'
meeting, specifying the persons paid, the amounts paid and the nature and status
at the time of such payment of the litigation or threatened litigation.

13.10 For purposes of this ARTICLE THIRTEEN, references to "the
corporation" shall include, in addition to the surviving or new corporation, any
merging or consolidating corporation (including any merging or consolidating
corporation of a merging or consolidating corporation) absorbed in a merger or
consolidation so that any person who is or was a director, officer, employee or
agent of such merging or consolidating corporation, or is or was serving at the
request of such merging or consolidating corporation as a director, officer,
partner, trustee, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other entity, shall stand in the same
position under the provisions of this ARTICLE THIRTEEN with respect to the
resulting or surviving corporation as he would if he had served the resulting or
surviving corporation in the same capacity.

<PAGE> 1

EXHIBIT 5.1

TROUTMAN SANDERS LLP
ATTORNEYS AT LAW
A LIMITED LIABILITY PARTNERSHIP

NATIONSBANK PLAZA
600 PEACHTREE STREET, N.E. - SUITE 5200
ATLANTA, GEORGIA 30308-2216
TELEPHONE: 404-885-3000
FACSIMILE: 404-885-3995
INTERNET: [email protected]

Thomas O. Powell 404-885-3294

April 1, 1998

CNB Holdings, Inc.
1303 Hightower Trail, Suite 130
Atlanta, Georgia 30350

Ladies and Gentlemen:

We have served as counsel to CNB Holdings, Inc. (the "Company"), a
corporation organized and existing under the laws of the State of Georgia, in
connection with the filing by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
of a Registration Statement on Form SB-2 (the "Registration Statement") with
respect to the offer and sale of shares of common stock, par value $1.00 per
share, of the Company (the "Shares").

In rendering this opinion, we have examined (i) the corporate books and
records of the Company and (ii) the Registration Statement and made such other
investigations as we have deemed necessary. In such examinations, we have
assumed the genuineness of all signatures on all original documents, the
conformity to the original documents of all copies submitted to us and (except
where our opinion expressly addresses execution and delivery) the due execution
and delivery of all documents where due execution and delivery are prerequisite
to the effectiveness thereof.

As to questions of fact material to this opinion, we have relied solely
upon the representations and warranties as to factual matters contained in
certificates and statements of officers of the Company and certain public
officials and upon the accuracy and completeness of the representations and
warranties of the parties to the Agreement. We have made no independent
investigations with regard thereto and, accordingly, we do not express any view
or belief as to matters that might have been disclosed by independent
verification.

Based upon and subject to the foregoing, we are of the opinion that,
assuming (i) the pertinent provisions of the Securities Act and the Securities
Exchange Act of 1934, as amended, shall have been complied with and (ii) the
applicable provisions of securities or "blue sky" laws of various states shall
have been complied with:

When certificates evidencing the Shares have been duly
executed, countersigned, registered, issued and delivered by the proper
officers of the Company in accordance with the Registration Statement,
the Shares will be duly and validly issued and outstanding, fully paid
and non-assessable Shares of common stock of the Company.

We are admitted to practice law in the State of Georgia only and do not
hold ourselves out as being experts on the law of any other jurisdiction.

<PAGE> 2

This opinion is limited to the matters expressly opined on herein, and
no opinion may be implied or inferred beyond those expressly stated. This
opinion is rendered as of the date hereof, and we make no undertaking and
expressly disclaim any duty to supplement or update such opinion, if, after the
date hereof, facts or circumstances come to our attention or changes in the law
occur which could affect such opinion.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the related prospectus.

Sincerely,

/s/ Thomas O. Powell

TROUTMAN SANDERS LLP

TOP:llt
cc: H.N. Padget, Jr., President and
Chief Executive Officer
Ralph W. Davis, Esquire

<PAGE> 1

EXHIBIT 10.4

CNB HOLDINGS, INC.
1998 INCENTIVE STOCK OPTION PLAN

1. PURPOSE. The purpose of the CNB Holdings, Inc. 1998 Incentive
Stock Option Plan (the "Plan") is to advance the interests of CNB Holdings, Inc.
(the "Company") by encouraging and enabling present and future key employees of
the Company and any parent or subsidiary of the Company to acquire a financial
interest in the Company through incentive stock options under the Plan. The
Company believes that the Plan will also aid the Company and any parent or
subsidiary of the Company in attracting and retaining outstanding key employees
and in stimulating the efforts of such employees to work for the success of the
Company.

2. ADMINISTRATION.

(a) General. The Plan shall be administered, construed and
interpreted by the Compensation Committee (the "Committee") of the Board of
Directors of the Company, or if no such committee is established, then by the
Board of Directors. In the event that there is not a Committee established at
any time during the term of any option granted hereunder, references herein to
the Committee shall be interpreted to be references to the Board of Directors.

(b) Grant of Options. The Committee shall from time to time
recommend the persons who shall participate in the Plan and the extent of their
participation. The Committee also shall recommend the price to be paid for
shares upon the exercise of options granted under the Plan, the period within
which each option may be exercised and the terms and conditions of each
individual Stock Option Agreement (as defined herein) by and between the Company
and the holder of the option. The terms and conditions of each individual Stock
Option Agreement shall be consistent with the provisions of the Plan, but the
Committee may provide for such additional terms and conditions, not in conflict
with the provisions of the Plan, as it deems advisable. All such recommendations
by the Committee shall be final upon the approval of the Board of Directors.

(c) Interpretation of Plan. In interpreting the Plan, the
Committee and Board of Directors shall be governed by the principles and
requirements of sections 421, and 422 and related sections of the Internal
Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations
applicable to incentive stock options and incentive stock option plans. Where
applicable, unless otherwise defined, a parent corporation is any corporation in
an unbroken chain of corporations ending with the Company if, at the time the
option is granted, each of the corporations other than the Company owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain. A subsidiary
corporation is any corporation in an unbroken chain of corporations beginning
with the Company if, at the time the option is granted, each of the
corporations, other than the last corporation in the unbroken chain, owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain. Such definitions
of parent and subsidiary shall be consistent with the definitions of such terms
as set forth in Code section 424. All other terms used herein shall have and
shall be interpreted as having the meanings set forth in the applicable
provisions of the Code. The interpretation and construction by the Committee of
any provision of or term used in the Plan or any option granted under the Plan
and any determination pursuant to any provision of the Plan or any such option
shall be final and conclusive, unless otherwise determined by the Board of
Directors. No member of the Committee or Board of Directors shall be liable for
any action or determination made in good faith, and members of the Committee and
the Board of Directors shall be entitled to indemnification and reimbursement
from time to time for expenses incurred in defense of such good faith action or
determination.

3. ELIGIBILITY. Options under the Plan may be granted to key senior
officers, key officers and other key employees of the Company or of one or more
of any future parents or subsidiaries of the Company who, in the opinion of the
Committee, are contributing significantly to the effective management and
supervision of the business of the Company or its parents or subsidiaries.
Options may be granted under the Plan only to persons who are employed by the
Company or one of its parents or subsidiaries at the time of the grant. The fact
that an employee is a member of the Board of Directors of the Company shall not
make him ineligible for an option grant

<PAGE> 2

unless his vote is required to secure a majority vote in favor of the grant of
his option. For purposes of the Plan, a person to whom an option is granted
under the Plan shall be referred to as a "Grantee".

4. SHARES SUBJECT TO PLAN. The shares subject to the Plan shall be
authorized but unissued or treasury shares of the Company's One Dollar ($1.00)
par value common stock (the "Common Stock"). Subject to readjustment in
accordance with the provisions of paragraph 6 of the Plan, the maximum number of
shares of Common Stock for which options may be granted under the Plan shall be
sixty thousand (60,000) shares, and the adoption of the Plan by the Board of
Directors of the Company shall constitute a reservation of sixty thousand
(60,000) shares of Common Stock for issuance only upon the exercise of options
granted under the Plan. In the event that any outstanding option granted under
the Plan for any reason expires or is terminated prior to the end of the period
during which options may be granted under the Plan, the shares of Common Stock
allocable to the unexercised portion of such option may again be subject in
whole or in part to any option granted under the Plan.

5. TERMS AND CONDITIONS OF OPTIONS. Options granted pursuant to the
Plan shall be evidenced by agreements (the "Stock Option Agreements") in such
form as the Committee and the Board of Directors shall, consistent with the
provisions of Code sections 421 and 422 and related sections of the Code and
applicable Treasury Regulations, approve from time to time. Such Stock Option
Agreements and the options evidenced thereby shall comply with and be subject to
the following terms and conditions:

(a) Number of Shares. Each Stock Option Agreement shall state the
total number of shares of Common Stock to which it pertains.

(b) Amount Limitation. A key employee may not be granted
incentive stock options which are exercisable for the first time in any one
calendar year under the Plan and any other incentive stock option plan of the
Company or any parent or subsidiary corporation of the Company for the purchase
of Common Stock with an aggregate fair market value of more than One Hundred
Thousand Dollars ($100,000) (valued as of the date of grant of the option).

(c) Option Price. The option price for each option granted under
the Plan shall be the amount determined by the Board of Directors, upon the
recommendation of the Committee, but, subject to the provisions of paragraph
5(j) of the Plan, shall not be less than one hundred percent (100%) of the fair
market value of the shares of Common Stock subject to the option on the date of
grant of the option. The date on which the Board of Directors approves the
granting of an option shall be considered the date on which such option is
granted. For purposes of the Plan, the "fair market value" of the shares of
Common Stock shall be the mean between the high "bid" and the low "asked" prices
of the Common Stock in the over-the-counter market on the day on which such
value is to be determined or, if no shares were traded on such day, on the next
preceding day on which shares were traded, as reported. If the Common Stock is
not regularly traded in the over-the-counter market but is registered on a
national securities exchange, the "fair market value" of the shares of Common
Stock shall mean the closing price of the Common Stock on such national
securities exchange on the day on which such value is to be determined or, if no
shares were traded on such day, on the next preceding day on which shares were
traded, as reported by National Quotation Bureau, Incorporated or other national
quotation service. If the Common Stock is not regularly traded in the
over-the-counter market or registered in a national securities exchange the
Committee shall determine the fair market value of the common stock in good
faith in accordance with Code section 422(c)(1) and accompanying Treasury
Regulations.

(d) Medium and Time of Payment. The option price shall be payable
upon the exercise of an option in cash or by check.

(e) Term and Exercise. Except as set forth in paragraph 5(j) of
the Plan, each option granted under the Plan shall be exercisable by the Grantee
only during a term fixed by the Board of Directors upon recommendation of the
Committee ending not later than ten (10) years after the date of grant of the
option. The Board of Directors upon recommendation of the Committee shall
determine whether the option shall be exercisable in full at any time during the
term or in cumulative or non-cumulative installments during the term.

(f) Method of Exercise. All options granted under the Plan shall
be exercised by written notice directed to the officer of the Company indicated
in the Stock Option Agreement at the Company's principal place of

<PAGE> 3

business. Such written notice shall specify the form of payment made by the
Grantee or his successor as provided by paragraph 5(d) of the Plan and shall be
accompanied by payment in full of the option price for the shares for which such
option is being exercised. The Company shall make delivery of certificates
representing the shares for which an option has been exercised within a
reasonable period of time; provided, however, that if any law, regulation or
agreement requires the Company to take any action with respect to the shares for
which an option has been exercised before the issuance thereof, then the date of
delivery of such shares shall be extended for the period necessary to take such
action.

(g) Effect of Termination of Employment or Death.

(A) Termination of Employment. Except as
otherwise provided in this subparagraph (A) or in subparagraph (B) below, upon
termination of the employment of any Grantee with the Company or any parent or
subsidiary corporation of the Company for any reason, all options held by the
Grantee under the Plan shall immediately terminate. Whether military, government
or other service or other leave of absence shall constitute a termination of
employment shall be determined in each case by the Committee in its discretion,
and any determination by the Committee shall be final and conclusive. The Board
of Directors upon recommendation of the Committee at its election may provide in
any Stock Option Agreement that the Grantee may exercise an option at any time
within three (3) months after the termination of employment of the Grantee with
the Company or any parent or subsidiary corporation then employing the Grantee
(or within one (1) year after the termination of such employment if such
employment is terminated due to the Grantee's permanent disability). In no
event, however, will the option be exercisable after the expiration of the term
of the option. In addition, exercise of the option following termination of the
Grantee's employment shall be subject to the following terms and conditions: (i)
with respect to any and all installments of the option that had not become
exercisable at the time of termination of employment, the period of extension
shall not, unless otherwise provided in the Stock Option Agreement, operate to
permit such installment to become exercisable within such period; and (ii) with
respect to any installment of the option that had become exercisable at the time
of termination of employment, the period of extension shall not operate to
permit the exercise of such installment after the expiration of the period
within which such installment may be exercised. For purposes of this
subparagraph (A), if any corporation ceases to be a parent or subsidiary of the
Company, the employment of any Grantee employed by such corporation shall be
deemed to have terminated unless such Grantee becomes an employee of the Company
or another parent or subsidiary of the Company simultaneously with or prior to
the time such corporation ceases to be a parent or subsidiary of the Company.
For purposes of the Plan, "permanent disability" shall mean a permanent
disability as defined in Code section 22(e)(3).

(B) Death. In granting any option under the
Plan, the Board of Directors and Committee may provide in the Stock Option
Agreement representing such option that in the event of the death of a Grantee
at a time when an option is exercisable by the Grantee, the Grantee's personal
representatives, heirs or legatees (the "Grantee's Successors") may exercise all
or any portion of such option held by the Grantee on the date of his death upon
proof satisfactory to the Company of their authority. The Grantee's Successors
must exercise any such option within twelve (12) months after the date of the
Grantee's death and in any event prior to the date of expiration of the option.
Such exercise otherwise shall be subject to the terms and conditions of the
Plan; provided, however, that with respect to any installment of the option that
had not become exercisable on the date of the Grantee's death, the period of
extension shall not, unless otherwise provided in the Stock Option Agreement,
operate to permit such installment to become exercisable within such period.

(h) Nonassignability of Option Rights. No option shall be
assignable or transferable by the Grantee except by will or by the laws of
descent and distribution. During the lifetime of the Grantee, the option shall
be exercisable only by the Grantee.

(i) Rights as Shareholder. Neither the Grantee nor the
Grantee's Successors shall have rights as a shareholder of the Company with
respect to shares of Common Stock covered by the Grantee's option until the
Grantee or the Grantee's Successors become the holder of record of such shares.
Except as specified in paragraph 6 of the Plan, no adjustment will be made for
dividends or other rights for which the record date is prior to the date on
which shares are issued upon exercise of an option.

(j) No Options in Certain Cases. Except as set forth in
this paragraph 5(j) of the Plan, no options shall be granted except within a
period of ten (10) years after the effective date of the Plan. In no event shall
an

<PAGE> 4

option be granted to any person who, at the time such option is granted, owns
(as defined in Code section 422(b)(6)) stock possessing more than ten percent
(10%) of the total combined voting power or value of all classes of stock of the
Company or of any parent or subsidiary corporation of the Company unless (i) the
option price under such option is not less than one hundred and ten percent
(110%) of the fair market value of the shares of Common Stock subject to such
option on the date of grant of such option (determined as provided in paragraph
5(c) of the Plan) and (ii) the terms of the Stock Option Agreement shall make
such option expire on the date that is the fifth (5th) anniversary after the
date on which the option is granted.

(k) Miscellaneous Provisions. The Stock Option Agreements
authorized under the Plan may contain such other provisions, not inconsistent
with the Plan or the applicable provisions of the Code, as the Committee shall
deem advisable.

6. ADJUSTMENTS.

(a) Recapitalization. In the event that, after the effective date
of the Plan, the outstanding shares of Common Stock are increased or decreased
or changed into or exchanged for a different number or kind of shares or other
securities of the Company by reason of a recapitalization, reclassification,
stock split, combination of shares or dividend payable in stock, appropriate
adjustments shall be made by the Committee in the number and kind of shares or
other securities for which options may be granted under the Plan. In addition,
the Committee, upon the occurrence of such an event, shall make appropriate
adjustments in the number and kind of shares or other securities as to which
outstanding options, or portions thereof then unexercised, shall be exercisable,
so that each Grantee's proportionate interest shall be maintained as before the
occurrence of such event. Such adjustment in outstanding options shall be made
without change in the total price applicable to the unexercised portion of each
option and with a corresponding adjustment in the option price per share. Any
fractional shares resulting from any of the foregoing adjustments under this
subparagraph (a) shall be disregarded and eliminated. Each such adjustment under
this subparagraph (a) shall be made in such a manner that such adjustment will
not constitute a "modification" as defined in Code section 424. All adjustments
made by the Committee (unless otherwise determined by the Board of Directors)
under this subparagraph (a) shall be final and conclusive.

(b) Reorganizations; Liquidation. If the Company shall be a party
to any reorganization involving a merger, consolidation or acquisition of the
stock or the assets of the Company, the Committee, in its discretion, may:

(A) Declare that all options granted under the Plan shall
become exercisable immediately notwithstanding the provisions of the respective
Stock Option Agreements regarding exercisability and that all options shall
terminate thirty (30) days after the Committee gives written notice to all
Grantees of their immediate right to exercise all options then outstanding and
of the Committee's decision to terminate all options not exercised within such
thirty-day period; or

(B) Notify all Grantees that all options granted under
the Plan shall apply with appropriate adjustments as determined by the Committee
to the securities of the resulting corporation to which holders of the number of
shares of Common Stock subject to such options would have been entitled.

The adoption of a plan of dissolution or liquidation by the Board of
Directors and the shareholders of the Company shall cause every option
outstanding under the Plan to terminate to the extent not exercised prior to the
adoption of the plan of dissolution or liquidation by the shareholders;
provided, however, that the Committee, in its discretion, may declare that all
options granted under the Plan shall become exercisable immediately
notwithstanding the provisions of the respective Stock Option Agreements
regarding exercisability; and provided further that in the event of the adoption
of a plan of dissolution or liquidation in connection with a reorganization as
described in the first sentence of this subparagraph (b), outstanding options
shall be governed by and be subject to the provisions of such sentence.

(c) Rights or Warrants. If any rights or warrants to subscribe
for additional shares are given pro rata to holders of outstanding shares of the
Common Stock, each Grantee under the Plan shall be entitled to the same rights
or warrants on the same basis as holders of the outstanding shares with respect
to such portion of the Grantee's option that may be exercised on or prior to the
date of the expiration of such rights or warrants.

<PAGE> 5

7. EFFECTIVE DATE AND TERMINATION OF PLAN.

(a) Effective Date. The effective date of the Plan shall be
March 31, 1998, the date of its adoption by the Board of Directors of the
Company, provided that the shareholders of the Company (acting at a duly called
meeting of the shareholders) shall approve the Plan before March 31, 1999.

(b) Termination. The Plan shall terminate ten (10) years after
its effective date, but the Board of Directors may terminate the Plan at any
time prior to such date. Termination of the Plan shall not alter or impair any
of the rights or obligations under any option theretofore granted under the Plan
unless the Grantee shall so consent.

8. APPLICATION OF FUNDS. The proceeds received by the Company
from the sale of shares of Common Stock pursuant to options granted under the
Plan will be used for general corporate purposes.

9. NO OBLIGATION TO EXERCISE OPTION. The granting of an option
shall impose no obligation upon the Grantee to exercise such option.

10. AMENDMENT. The Board of Directors of the Company by majority
vote may at any time and from time to time amend the Plan in such respects as it
shall deem advisable in order that options granted under the Plan shall be
"incentive stock options" as defined in Code section 422, or to conform to any
change in the law, or for any other purpose; provided, however, that without the
approval of the shareholders of the Company, no such amendment shall change:

(a) The maximum number of shares of Common Stock as to which
options may be granted under the Plan (except by operation of the adjustment
provisions of the Plan); or

(b) The date on which the Plan will terminate as provided by
paragraph 7(b) of the Plan; or

(c) The minimum option price as provided under paragraph 5(c) of
the Plan, other than to change the manner of determining the fair market value
of the Common Stock to conform with any provisions of the Code or Treasury
Regulations thereunder applicable to incentive stock options or if such change
is necessitated by a change in the manner in which the Common Stock is traded;
or

(d) The period during which options may be granted as provided in
paragraph 5(j) of the Plan (provided, however, that the Board of Directors of
the Company shall have the power set forth in paragraph 7(b) to terminate the
Plan); or

(e) The provisions of paragraph 3 of the Plan relating to the
determination of employees to whom options may be granted.

Any amendment to the Plan shall not, without the written consent of the
Grantee, affect such Grantee's rights under any option theretofore granted to
such Grantee.

11. GOVERNING LAW. The Plan and all determinations made and
actions taken pursuant thereto shall be governed by the laws of the State of
Georgia and construed in accordance therewith.

<PAGE> 6

CNB HOLDINGS, INC.
INCENTIVE STOCK OPTION AGREEMENT

This Incentive Stock Option Agreement ("Agreement"), dated as of , 199_
(the "Date of Grant"), is made and entered into by CNB HOLDINGS, INC., a Georgia
corporation ("CNB"), and (the "Grantee"), who is an employee or officer of CNB
or one of its parents or subsidiaries (the Grantee's employer is sometimes
referred to herein as the "Employer").

WHEREAS, the Board of Directors of CNB (the "Board") adopted the CNB
Holdings, Inc. 1998 Incentive Stock Option Plan (the "Plan") on March 31, 1998
and the shareholders of CNB adopted the Plan on ________, 1998;

WHEREAS, the Plan provides for the granting of incentive stock options
by the Compensation Committee of the Board of Directors of CNB (the "Committee")
to employees of CNB or any parent or subsidiary of CNB to purchase shares of the
common stock of CNB, par value one dollar ($1.00) per share (the "Stock"), in
accordance with the terms and provisions thereof; and

WHEREAS, the Committee considers the Grantee to be a person who is
eligible for a grant of incentive stock options under the Plan and has
determined that it would be in the best interest of CNB to grant the incentive
stock options documented herein.

NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:

1. GRANT OF OPTION

Subject to the terms and conditions hereinafter set forth, CNB, with
the approval and at the direction of the Committee, hereby grants to the
Grantee, as of the Date of Grant, an option to purchase up to shares of Stock at
a price of $ per share, which is the fair market value of the Stock as defined
in the Plan. Such option is hereinafter referred to as the "Option," and the
shares of Stock purchasable upon exercise of the Option are hereinafter
sometimes referred to as the "Option Shares". The Option is intended by the
parties hereto to be, and shall be treated as, an incentive stock option, as
such term is defined under section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). Subject to such further limitations as are provided
herein, the Option is exercisable commencing on the Date of Grant.

2. TERMINATION OF OPTION

The Option and all rights hereunder with respect thereto, to the extent
such rights shall not have been exercised, shall terminate and become null and
void upon the earlier of: (i) ten (10) years after the Date of Grant; or (ii)
the date on which the Grantee shall be convicted of any act of malfeasance or
wrongdoing directly or indirectly affecting CNB or any parent or subsidiary of
CNB.

3. EXERCISE OF OPTION

(a) The Grantee may exercise the Option with respect to all or
any part of the number of Option Shares then exercisable hereunder by giving the
Secretary of CNB written notice of intent to exercise. The notice of exercise
shall specify the number of Option Shares as to which the Option is to be
exercised and the date of exercise thereof.

(b) Upon a termination of the Grantee's employment for any
reason other than as set forth in Section 2(ii) of this Agreement, the Option
may be exercised during the following periods, but only to the extent that the
Option was outstanding and exercisable on any such date of termination: (i) the
one-year period following the date of the Grantee's death, in the case of the
Grantee's death during his employment by the Employer, or the one-year period
following the termination of employment due to permanent disability (as
determined by the Plan) and (ii) the three-month period following the date of
such termination in the case of termination of his employment

<PAGE> 7

for any reason other than the death or permanent disability of the Grantee or
pursuant to Section 2(ii) of this Agreement. A transfer of the Grantee's
employment between CNB and any subsidiary of CNB, or between any subsidiaries of
CNB, shall not be deemed to be a termination of the Grantee's employment.

(c) Full payment (in U.S. dollars) by the Grantee of the
option price for the Option Shares purchased shall be made in cash on or before
the exercise date specified in the notice of exercise.

(d) On the exercise date specified in the Grantee's
notice or as soon thereafter as is practicable, CNB shall cause to be delivered
to the Grantee a certificate or certificates for the Option Shares then being
purchased (out of unissued Stock or reacquired Stock, as CNB may elect) upon
full payment for such Option Shares. The obligations of CNB to deliver the Stock
shall, however, be subject to the condition that if at any time the Committee
shall determine in its discretion that the listing, registration or
qualification of the Option Shares upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, the
Option or the issuance or purchase of the Stock thereunder, the Option may not
be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.

(e) If the Grantee fails to pay for any of the Option
Shares specified in such notice or fails to accept delivery thereof, the
Grantee's right to purchase such Option Shares may be terminated by CNB. The
date specified in the Grantee's notice as the date of exercise shall be deemed
the date of exercise of the Option, provided that payment in full for the Option
Shares to be purchased upon such exercise shall have been received by such date.

4. ADJUSTMENT OF AND CHANGES IN STOCK OF CNB

(a) In the event of a reorganization, recapitalization,
change of shares, stock split, spin-off, stock dividend, reclassification,
subdivision or combination of shares, rights offering or any other change in the
corporate structure or shares of capital stock of CNB, the Committee shall make
such adjustment as appropriate in the number and kind of shares of Stock subject
to the Option or in the option price; provided, however, that no such adjustment
shall give the Grantee any additional benefits under the Option.

(b) In the event that CNB shall be a party to any
reorganization involving a merger, consolidation or acquisition of the Stock or
the assets of CNB, the Committee, in its sole discretion, may:

(i) declare that the Option granted hereunder
shall become exercisable immediately notwithstanding the provisions of this
Agreement regarding exercisability and that the Option shall terminate thirty
(30) days after the Committee gives written notice to Grantee of his immediate
right to exercise the Option and of the Committee's decision to terminate the
Option if not exercised within such thirty-day period; or

(ii) notify the Grantee that the Option granted
hereunder shall apply with appropriate adjustments as determined by the
Committee to the securities of the resulting corporation to which holders of the
number of shares of Stock subject to the Option would have been entitled.

(c) The adoption of a plan of dissolution or liquidation
by the Board of Directors and the shareholders of CNB shall cause the Option to
terminate to the extent not exercised prior to the adoption of the plan of
dissolution or liquidation by the shareholders of CNB; provided, however, that
the Committee, in its discretion, may declare that the Option shall become
exercisable immediately notwithstanding the provisions of this Agreement
regarding exercisability; and provided further that in the event of the adoption
of a plan of dissolution or liquidation in connection with a reorganization as
described in the first sentence of subparagraph (b), the Option shall be
governed by and be subject to the provisions of such sentence.

(d) If any rights or warrants to subscribe for additional
shares are given pro rata to holders of outstanding shares of the Stock, the
Grantee shall be entitled to the same rights or warrants on the same basis as
holders of the outstanding shares with respect to such portion of the Grantee's
Option that may be exercised on or prior to the date of the expiration of such
rights or warrants.

<PAGE> 8

5. FAIR MARKET VALUE

For purposes of the Plan, the "fair market value" of the shares of
Stock shall be the mean between the high "bid" and the low "asked" prices of the
Stock in the over-the-counter market on the day on which such value is to be
determined or, if no shares were traded on such day, on the first day
immediately preceding such day on which shares were traded. If the Stock is not
regularly traded in the over-the-counter market but is registered on a national
securities exchange, the "fair market value" of the shares of Stock shall mean
the closing price of the Stock on such national securities exchange on the day
on which such value is to be determined or, if no shares were traded on such
day, on the first day immediately preceding such day on which shares were
traded. If the Stock is not regularly traded in the over-the-counter market or
registered on a national securities exchange the Committee shall determine the
fair market value of the Stock in good faith in accordance with Code section
422(c)(1) and accompanying Treasury Regulations.

6. NO RIGHTS OF SHAREHOLDERS

Neither the Grantee nor any personal representative shall be, or shall
have any of the rights and privileges of, a shareholder of CNB with respect to
any shares of Stock purchasable or issuable upon the exercise of the Option, in
whole or in part, prior to becoming the holder of record of such shares.

7. NON-TRANSFERABILITY OF OPTION

During the Grantee's lifetime, the Option hereunder shall be
exercisable only by the Grantee or a legal representative of the Grantee, and
the Option shall not be transferable except, in case of the death of the
Grantee, by will or the laws of descent and distribution, nor shall the Option
be subject to attachment, execution or other similar process. In the event of
(a) any attempt by the Grantee to alienate, assign, pledge, hypothecate or
otherwise dispose of the Option, except as provided for herein, or (b) the levy
of any attachment, execution or similar process by any third party upon the
rights or interest hereby conferred, CNB may terminate the Option by notice to
the Grantee, and it shall thereupon become null and void.

8. EMPLOYMENT NOT AFFECTED

Neither the granting of the Option nor its exercise shall be construed
as granting to the Grantee any right with respect to continuance of employment
by the Employer. Except as may otherwise be limited by a written agreement
between the Employer and the Grantee, the right of the Employer to terminate at
will the Grantee's employment with it at any time (whether by dismissal,
discharge, retirement or otherwise) is specifically reserved by CNB, as the
Employer or on behalf of the Employer (whichever the case may be), and
acknowledged by the Grantee.

9. AMENDMENT OF OPTION

This Agreement and the terms of the Option may be amended by the Board
or the Committee at any time (i) if the Board or the Committee determines, in
its sole discretion, that amendment is necessary or advisable due to any
addition to or change in the Code or in the regulations issued thereunder, or
any federal or state securities law or other law or regulation, which change
occurs after the Date of Grant and by its terms applies to the Option; or (ii)
other than in the circumstances described in clause (i), with the consent of CNB
and the Grantee.

10. SECURITIES LAWS.

This Option may not be exercised if the issuance of shares of Stock of
CNB upon such exercise would constitute a violation of any applicable Federal or
State securities or other law or valid regulation. The Grantee, as a condition
to his exercise of this Option, shall represent to CNB that the shares of Stock
of CNB that he acquires under this Option are being acquired by him for
investment and not with a present view to distribution or resale, unless counsel
for CNB is then of the opinion that such a representation is not required under
the Securities Act of 1933, as amended (the "Securities Act"), or any other
applicable law, regulation or rule of any governmental agency.

<PAGE> 9

The Grantee represents and warrants that he will be acquiring the
Option Shares for investment purposes and not with a view to distribution. The
Grantee further represents and warrants that he is aware that the Option Shares
have not been registered under the Securities Act or under the provisions of
Georgia law and that the Option Shares may not be sold, transferred or otherwise
assigned without registration or an exemption therefrom. Grantee acknowledges
being informed by CNB that the Option Shares are restricted securities and that
each certificate for shares of Stock issued upon exercise of the Option shall be
stamped or otherwise imprinted with a restrictive legend in form and context
deemed necessary by CNB. The undersigned further acknowledges that he is a
shareholder of CNB and is aware of the business and operations of CNB.

11. NOTICE

Any notices or other communications to any party pursuant to or
relating to this Agreement and the transactions provided for herein shall be
deemed to be given, delivered or received when delivered personally or three
days after being deposited in the United States Mail, registered or certified,
and with proper postage and registration and certification fees prepaid,
addressed to the parties for whom intended at the addresses indicated for each
party as set forth below:

CNB: CNB Holdings, Inc.

--------------------------------------

--------------------------------------
Attention: , President
----------------------

with a copy to: Thomas O. Powell, Esquire
Troutman Sanders LLP
600 Peachtree Street, N.E., Suite 5200
Atlanta, Georgia 30308

Grantee:
----------------------------------------
----------------------------------------
----------------------------------------

12. INCORPORATION OF PLAN BY REFERENCE

The Option is granted pursuant to the terms of the Plan, the terms of
which are incorporated herein by reference, and the Option shall in all respects
be interpreted in accordance with the Plan. The Committee shall interpret and
construe the Plan and this instrument, and its interpretations and
determinations shall be conclusive and binding on the parties hereto and any
other person claiming an interest hereunder, with respect to any issue arising
hereunder or thereunder.

13. GOVERNING LAW

The validity, construction, interpretation and effect of this Agreement
shall exclusively be governed by and determined in accordance with the law of
the State of Georgia.

14. COUNTERPARTS

This Agreement may be executed with counterpart signature pages, all of
which together shall constitute one and the same Agreement.

15. SUCCESSORS AND ASSIGNS

This Agreement shall inure to the benefit of and be enforceable by and
binding upon the permitted successors and assigns of each party, including the
personal or legal representatives, executors, administrators, heirs and legatees
of the Grantee.

<PAGE> 10

IN WITNESS WHEREOF, CNB has caused its duly authorized officers to
execute and attest this Agreement, and to apply the corporate seal hereto, and
the Grantee has placed his or her signature hereon, effective as of the date
first written above.

ATTEST: CNB HOLDINGS, INC.

By: By:
---------------------------- --------------------------------
Its: Its:
----------------------- ---------------------------
[CORPORATE SEAL]

GRANTEE

- ------------------------------- -----------------------------------
Witness

<PAGE> 1

EXHIBIT 10.5

CNB HOLDINGS, INC.
NON QUALIFIED STOCK OPTION PLAN

A. PURPOSE AND SCOPE

The purpose of this Plan is to attract, retain and compensate key
personnel and directors of the Company through the grant of options to purchase
shares of the Company's common stock.

B. DEFINITIONS

Unless otherwise required by the context:

1. "Board" shall mean the Board of Directors of the Company.

2. "Company" shall mean CNB Holdings, Inc., a Georgia corporation, or
any parent or subsidiary.

3. "Code" shall mean the Internal Revenue Code of 1986, as amended.

4. "Option" shall mean a right to purchase Stock granted pursuant to
the Plan.

5. "Option Price" shall mean the purchase price for Stock under an
Option, as determined in Section F below.

6. "Participant" shall mean an employee or director of the Company to
whom an Option is granted under the Plan.

7. "Plan" shall mean this CNB Holdings, Inc. Non Qualified Stock Option
Plan.

8. "Stock" shall mean the common stock, One Dollar ($1.00) par value,
of the Company.

C. STOCK TO BE OPTIONED

Subject to the provision of Section M of this Plan, the maximum number
of shares of Stock that may be optioned or sold under the Plan is 40,000 shares.
Such shares may be treasury, or authorized, but unissued, shares of Stock of the
Company.

D. ADMINISTRATION

The Plan shall be administered by the Board. The Board shall be
responsible for the operation of the Plan with respect to participation in the
Plan by employees of the Company, and with respect to the extent of that
participation. The interpretation and construction of any provision of the Plan
by the Board shall be final. No member of the Board shall be liable for any
action or determination made by him in good faith.

<PAGE> 2
E. ELIGIBILITY

The Board may grant Options to any key employee (including an employee who
is a director or an officer) or any member of the Board of Directors of the
Company. Options may be awarded by the Board at any time and from time to time
to new Participants, or to then Participants, or to a greater or lesser number
of Participants, and may include or exclude previous Participants, as the Board
shall determine. Options granted at different times need not contain similar
provisions.

F. OPTION PRICE

The purchase price for Stock under each Option shall be determined in each
case by the Board.

G. TERMS AND CONDITIONS OF OPTIONS

Options granted pursuant to the Plan shall be authorized by the Board and
shall be evidenced by agreements in such form as the Board shall from time to
time approve. Such agreements shall comply with and be subject to the following
terms and conditions:

1. Employment Agreement. The Board may, in its discretion,
include in any Option granted under the Plan a condition that the Participant
shall agree to remain in the employ of, and to render services to, the Company
for a period of time specified in the Option agreement following the date the
Option is granted. No such agreement shall impose upon the Company, however, any
obligation to employ the Participant for any period of time.

2. Time and Method of Payment. The Option Price shall be paid in
full in cash at the time an Option is exercised under the Plan. Otherwise, an
exercise of any Option granted under the Plan shall be invalid and of no effect.
Promptly after the exercise of an Option and the payment of the full Option
Price, the Participant shall be entitled to the issuance of a stock certificate
evidencing his ownership of such Stock. A participant shall have none of the
rights of a shareholder until shares are issued to him, and no adjustment will
be made for dividends or other rights for which the record date is prior to the
date such stock certificate is issued.

3. Number of Shares. Each Option shall state the total number of
shares of Stock to which it pertains.

4. Option Period and Limitations on Exercise of Options. The
Board may, in its discretion, provide that an Option may not be exercised in
whole or in part for any period or periods of time specified in the Option
agreement. Except as provided in the Option agreement, an Option may be
exercised in whole or in part at any time during its term. No Option may be
exercised: (i) after the expiration of ten years from the date it is granted;
(ii) for a fractional share of Stock; or (iii) in the event the Company's
primary federal regulator determines that the Company's capital has then fallen
below such regulator's requirements.

H. TERMINATION OF EMPLOYMENT

In any Option agreement, the Board may provide that if a Participant ceases
to be employed by the Company for any reason, including, but not limited to, the
death of the Participant, his Options which have not been exercised as of the
date of termination shall immediately terminate and be of no further force and
effect.

I. NO OBLIGATIONS TO EXERCISE OPTION

The granting of an Option shall impose no obligation upon the Participant to
exercise such Option.

<PAGE> 3

J. NONASSIGNABILITY

Options shall not be transferable and shall be exercisable only by such
Participant.

K. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN

The aggregate number of shares of Stock available for Options under the
Plan, the shares subject to any Option and the price per share shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Stock subsequent to the effective date of the Plan resulting from (i)
a subdivision or consolidation of shares or any other capital adjustment; (ii)
the payment of a stock dividend; (iii) other increase or decrease in such shares
effected without receipt of consideration by the Company; or (iv) any merger,
recapitalization or other form of reorganization or corporate restructuring
involving the Company. An Option shall pertain, apply and relate to the
securities of any successor in the event of a corporate restructuring, subject
to appropriate adjustment.

L. AMENDMENT AND TERMINATION

The Board, by resolution, may terminate, amend or revise the Plan with
respect to any shares as to which Options have not been granted. Neither the
Board nor the Committee may, without the consent of the holder of an Option,
alter or impair any Option previously granted under the Plan. Unless sooner
terminated, the Plan shall remain in effect for a period of ten (10) years from
the date of the Plan's adoption by the Board. Termination of the Plan shall not
affect any Option previously granted. The Plan shall be binding upon the
Company, its successors and assigns.

M. AGREEMENT AND REPRESENTATION OF EMPLOYEES

As a condition to the exercise of any portion of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of such exercise that any shares of Stock acquired at exercise are being
acquired only for investment purposes and without any present intention to sell
or distribute such shares, if, in the opinion of counsel for the Company, such a
representation is required under the Securities Act of 1933, as amended, or any
other applicable law, regulation or rule of any governmental agency.

N. RESERVATION OF SHARES OF STOCK

The Company, during the term of this Plan, will at all times reserve and
keep available, and will seek or obtain from any regulatory body having
jurisdiction any requisite authority necessary to issue and to sell, the number
of shares of Stock that shall be sufficient to satisfy the requirements of this
Plan. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority deemed necessary by counsel for the Company for the
lawful issuance and sale of its Stock hereunder shall relieve the Company of any
liability in respect of the failure to issue or sell Stock as to which the
requisite authority has not been obtained.

O. EFFECTIVE DATE OF PLAN

The Plan shall be effective from the date that the Plan is approved by the
Board.

<PAGE> 1

EXHIBIT 21.1

SUBSIDIARIES OF THE COMPANY

The sole subsidiary of the Company is Chattahoochee National Bank, a
National Banking Association organized under the laws of the United States.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT

We hereby consent to the incorporation by reference of our report dated February
27, 1998, relating to the financial statements of CNB Holdings, Inc., in the
Registration Statement on Form SB-2 and Prospectus, and to the reference to our
firm therein under the caption "Experts."

/s/ BRICKER & MELTON, P.A.

BRICKER & MELTON, P.A.

Duluth, Georgia
Mach 26, 1998

<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CNB HOLDINGS, INC. AS OF AND FOR THE PERIOD FROM
INCEPTION (NOVEMBER 5, 1997) TO DECEMBER 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> NOV-05-1997
<PERIOD-END> DEC-31-1997
<CASH> 60,698
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 195,045
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 45,845
<LONG-TERM> 57,479
0
0
<COMMON> 0
<OTHER-SE> 91,721
<TOTAL-LIABILITIES-AND-EQUITY> 195,045
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 736
<INTEREST-TOTAL> 736
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 736
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 29,015
<INCOME-PRETAX> (28,279)
<INCOME-PRE-EXTRAORDINARY> (28,279)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (28,279)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0

</TABLE>